Apollo News, on July 24, reported that former Chinese e-commerce giant eBay announced the closure of all its services due to adjustments in operations strategy. 

According to the announcement, on August 12, the company will terminate all functions related to online transactions, including registration, login, and recharge, and then close down the entire website server. 

EBay is finally exiting China after 23 years of online auction business. Forbes noted that the case of eBay China provides multinational companies priceless lessons to succeed in the country.

The media outlet pointed out 3 main causes leading to Ebay’s downfall.

First and also its biggest mistake was that both top managers appointed to lead operations in China came from Germany and the U.S. Neither could speak Chinese or understand the local market.

Second, the top management team kept spending money inefficiently, such as through online advertising to target small companies that would normally watch TV.

And the last reason was that eBay’s global platform did not suit the taste of Chinese customers.

As reported by China News, eBay China was founded in 1999 by Shao Yibo as an e-commerce platform named EachNet. In 2000, the company became the largest e-commerce website in China.

EachNet reached its peak in 2003 after joining eBay and became a Consumer to Consumer (C2C) behemoth with an 80% market share.

However, the company’s performance was not as good after its founder decided to sell to eBay for 225 million dollars and then changed its name to eBay EachNet.

After this, Jack Ma, Alibaba CEO and owner, launched Tao Bao to limit the market for eBay. As he already understood the market and needs of the Chinese people, Tao Bao gradually dominated the market and thwarted its competitors. 

While eBay EachNet still stuck with its global business model, which charged sellers for listing and transaction fees, Tao Bao 淘宝 was free to use right from the start.

This non-stop free listing strategy helped Tao Bao gain more and more customers from eBay EachNet. 

The company’s listings were customer-centered, whereas eBay EachNet focused more on products.

In addition, Jack Ma also secured advertisements for Tao Bao 淘宝 on major TV channels to target small business people directly.

As a result, in March 2006, Tao Bao took over the C2C market with 67% market share in terms of users, while eBay EachNet’s market share plunged to 29%. 

Also, by the end of the year, eBay EachNet formed a joint venture with Tom Online, which had only 173 million dollars in revenue and no experience in the online business.

The report noted that this was, in fact, a formal announcement of eBay EachNet’s withdrawal from the online auction market in China.

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