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E Comm

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Submitted By saamy82
Words 3132
Pages 13
Case Analysis # 3
Question 1
Why has Taobao Marketplace succeeded online when eBay has failed?
Taobao approached advertising very differently than did eBay China. eBay’s approach was to invest heavily in its marketing campaigns in China, and to sign exclusive contracts with almost all the major Chinese websites.
These contracted websites then were forbidden to sell advertisements to eBay’s competitors. This exclusion was important to Taobao, since it badly needed publicity.
To deal with this problem, Taobao, team switched to the ants’ way whereby they took advantage of the enormous number of computer bulletin board services (BBS) in China, and posted thousands of messages there to introduce Taobao to Internet users.
According to them, this grassroots approach to online marketing worked well, and Taobao continued this approach even after most of eBay’s exclusive advertising contracts expired, where marketing team mention eBay have deep pockets, but they are cutting a hole in their pocket.
Moreover Taobao launched with an entirely no-fee model. It further extended the no-fee plan for three additional years starting in October 2005.
According to a survey taken in 2005, a significant number of eBay China’s users were migrating to Taobao because of the free services. eBay China responded by defending its fee structure, noting that “free is not a business model,” and that quality service made such fees necessary.
Taobao designed its categories in accordance with the typical structure of a Chinese department store, with separate sections for men’s and women’s departments.
By contrast, eBay China used the category structure set by eBay’s global platform. Taobao focused on fostering a sense of community on its website, by setting up online forums for its users and by encouraging interactions between sellers and buyers.
Because of the no-fee policy, Taobao

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