This cautious strategy was very unusual for eBay, because they used full-forced, head- on, . E-flirts-or-nothing. Strategy in other markets, for various reasons, it would be impossible to implement this strategy when penetrating Chinese market. So acquiring an already comparatively recognizable and well established brand seemed to be the best way to continue eBay’s expansion in Asia. Without a doubt, Each Net was the best candidate for acquisition at the time.
When eBay acquired 33% shares of Each Net in 2002, It seemed to be hugely successful, because in year 2003 the value of Each Net had doubled and market share had rocketed to 85% – this Initial success encouraged full acquisition of Each Net. As we know, the success did not turn out to be long-lasting, despite the fact that In first few years the performance of the company was brilliant. While occultation of Each Net meant many advantages for eBay, it also implied serious disadvantages.
Advantages of Each Net acquisition: Each net had strong financial backing from large venture capital companies ; Immense market potential – 1,23 billion Chinese language speakers all around the world ; Rapidly increasing number of internet users in China – increasing number f potential customers ; Each Net in essence was an imitation of eBay, adjusted to fit Chinese customer needs, but with much greater recognition in China ; Increasing popularity of shopping online (also by using Each Net) In China. Well established image of Each Net In China High Each Net market share (about 50%) In year 2002 Wide range of different items sold through Each Net Only significant player in online auction market in China by year 2002 was Each Net Disadvantages of Each Net acquisition: Cultural differences and buying habits of Chinese. Huge investments required
Unpredictability of the fast-changing Chinese market – huge risks ; Emerging competitors – Tattoo (Alabama subsidiary), which outcomes eBay Each Net in future, by better adjusting to Chinese customer needs and buying habits ;Alabama had more established presence in China and much better knowledge of Chinese customers – reason for Increasing lack of consumer trust In eBay Each Net In future ; Each Net failed to create customer trust in future, while Taboo succeeded ; Chinese possibilities between buyer and seller, provided by eBay Each Net – important for
Chinese, Taboo was much better in this aspect ; Comparatively poor customer service In conclusion, this acquisition, which was probably the right step by eBay, turned out to be failure, despite the fact, that at first it seemed to be a huge success. In my opinion it is because eBay’s management was so overwhelmed with the initial success, that they lost caution – they were very conscious at beginning but failed to adjust to customer needs, they did not pay enough attention to them, which led to eBay Each Net to situation where they were outcomes by Taboo in Chinese market.
