History About Ebay In Japan Marketing Essay

eBay is an online auction service that has gained much promotion since their inauguration in the September of 1995 with a 28 time old software programmer, Pierre Omidyar of Apple Incorporated. A dog or cat project he in the beginning called AuctionWeb, he posted up a faulty laser pointer to test his algorithm in the net program he created, someone actually offered him $14. 83 for the faulty laser beam pointer saying that he collects such items. That occurrence started Pierre considering and eBay was developed. Since that time, eBay has been growing their business worldwide.

One of the countries which eBay has failed terribly was Japan. That they had a jv with NEC Company to form eBay Japan however the benefits after 3 long many years of fight that has been proven as futile attempts to produce a ft. hold in Japan, eBay Japan had no other choice but to withdraw because they lost out for not being there earlier, not enjoying a first mover advantage, the rise of the Rakuten Auctions as contender against Yahoo! Japan Auctions further dug eBay more deeply into the oblivion against ever witnessing themselves as a leader in Japan.

Hiring the right country supervisor makes all the difference, eBay did not ensure the credentials and expertise of the country administrator appointed for the duty. Apart from that, the typical American style of "Announcing" their grand appearance even before they could sniff the air in Japan, gave competitors an opportunity to make themselves against anyone looking to steal their little bit of the pie in Japan.

Introduction of eBay

When we hear of the word, "Auction" we often think of the famous Christie Public sale house in England, located at Ruler Streets in St. Wayne. The function of auction house is to showcase exceptional or prized items which could fetch the best price via an elaborate process that allows individuals with profound storage compartments to out-bid one another to purchase these items.

Thanks to modern tools, these auctions are being helped bring on-line via the utilization of the web. Users can buy or sell items online through the same elaborate process, but at the comfort of their room, in front of their computers with no need to actually be at the location. eBay is one particular on-line public sale service that has gained much promotion since their inauguration in the September of 1995 by a 28 calendar year old software creator, Pierre Omidyar of Apple Incorporated. A pet project he initially called AuctionWeb, he put up up a faulty laser pointer to check his algorithm in the net program he created, someone actually offered him $14. 83 for the faulty laser beam pointer proclaiming that he gathers such items. That event started Pierre considering and eBay was created.

AuctionWeb became a fresh focus for Pierre. It occupied his whole domain, www. ebay. com, acronym for Echo Bay (the name of his consulting firm).

By 1996, the company was large enough to require specialized help to make the strategy, even more profitable. Jeffrey Skoll, Stanford MBA graduate, proceeded to go onboard the income spinning dispatch. Meg Whitman, a Harvard graduate soon signed up with the `staff' and as well as a formidable business team, created the present day day eBay that people know today. By 1998, the pioneers of the company were billionaires.

Entry Strategies

Entry Strategy 1 - eBay Be a part of Hands with NEC Firm to type in Japan Market

The jv with NEC Company to form eBay Japan appeared like a good idea. Infact, it is a superb idea. Creating a localized corporation to enter the Japanese market builds the credibility any international company will need. Having a myriad of alternatives from because they could trade with anything.

eBay gained coverage through NEC's contact with Biglobe, an Internet Service Provider. Much media hype was expected as the CEO for eBay, Mr. Okawara, appeared forward to getting online auctioning to the Japanese people.

However, japan culture amongst younger era is to meet at department stores, to test new introductions into the Japanese market. Touch and Feel is what they favor. Also, from the sociable norm in Japan that individuals meet at malls to socialize or maybe to check out people. What eBay attempted to do, was to introduce another culture's norm into Japan. Though a workable and definitely profitable business model in the states and probably even in the western world, they failed to garner enough market sampling to warrant an admittance into the Japanese market. That's just area of the obstacle they face.

The other factor that acquired brought forth the first retreat from Japan is the existence of Yahoo Auctions in Japan. Yahoo inserted the marketplace in 1996, as well as Softbank. The cooperation between Yahoo and Softbank was at the right time where in fact the novelty of the internet continues to be hot. They built the major site in Japan which means their presence already had an enormous market show from consumers and retailers alike who has loyalty to the company. Japanese people have advanced of loyalty to product brandings and service providers.

Another thing eBay Japan did not forsee is the fact, Japanese people, do not appreciate hand-me-downs, used goods.

Entry Strategy 2 - eBay Joins Hands with Yahoo! in Japan

eBay has about 83 million users and Yahoo Japan has about 6. 6 million registered users. eBay and Yahoo agreed to link their auction sites to help "cross-border trading" and invigorate the online auction market. This might enable users of Yahoo Auctions Japan to bid for items shown on eBay's US site utilizing their Yahoo Japan Identification, and eBay users in america to buy items auctioned on Yahoo Japan using their eBay ID. The program, which will permit registered users from Japan and THE UNITED STATES to take part in a single industry.

Japanese-language Website sekaimon. com, presented by the firms will allow Yahoo Japan users to be a part of eBay auctions which is part of a technique to execute the integration.

A reverse setup, enabling UNITED STATES users to shop for items from Japan under an English-language bidding system. The eBay portal will in the beginning feature Japanese licensed-character goods, comic literature, and other collectibles outlined on the Yahoo Japan auction site.

The integrated market place will also offer services to streamline payment, shipping and traditions clearance.

International users were able to use the US based site consumers craved trading in local currencies and the efficiency that domestic orders presented.

Disadvantages of Non-first movers for Auction

Disadvantage 1 - Unable to garner the interested customers

The first downside of not being the first mover to establish the online public sale services has brought on eBay Japan to lose the opportunity to garner the interested customer bottom who are rookies that really wanted to attempt the web Public sale services.

Being the first mover could have allowed the first timer customers whom are interested to sign up and look at this online public sale services that hasn't been provided in Japan as many analyst feels that the kick off would not have been successful because of the image consciousness figure of japan.

Therefore, being only the second starting provided, eBay Japan has lost the original interested first timer customers as they have already enrolled in the online auction services provided by Yahoo! Japan Auction when they launched the service in Sept 1999, that was five months before eBay Japan.

Disadvantage 2 - Struggling to attract over Yahoo! Japan Public sale loyal customer base

The second downside is eBay Japan is unable to attract in the loyal customer platform garnered by Yahoo! Japan Public sale five months before their unveiling. All the devoted customer base has already been used to the assistance provided by Yahoo! Japan Auction offers no intention to move over to eBay Japan.

In addition, Yahoo! has been a recognised and most widely known brand in Japan for other services such as Yahoo! Email, search, etc however, in contrary, eBay has only been known for online public sale services and limited to international which is outside Japan. Therefore, Japanese, who generally only trust reputable, well-known and proven brands, are more comfortable using Yahoo! rather than eBay.

Disadvantage 3 - Evaluation of first and second online auction service launcher

The third downside of not being the first mover has been compared to the first launcher. The clients has done an evaluation between Yahoo! Japan Action and eBay Japan on the difference in the different areas such as charging listing fees, final value fees, branding strength.

Yahoo! Japan Public sale has launched the online auction services before eBay Japan with all services free no any deal charges whatsoever. Therefore, compared, Japanese who aren't willing to cover the service are not willing to join up for services for eBay Japan.

Also, it has additionally proven that when eBay Japan has stopped the charging the fees according to the usual practice, the client base and the amount of entries has increased.

Cultural Misunderstandings

Cross ethnic understanding simply refers to the basic capacity of individuals within business to recognize, interpret and appropriately react to people, incidences or situations that are open to misunderstanding credited to cultural variances. If no ethnic awareness, cultural sensitive was founded before releasing into an alternative culture, it'll cause cultural misunderstanding, in long term, resulting in business inability.

Misunderstanding 1 - Not completely understanding the way of thinking of an different culture

For eBay Japan, through the initial unveiling into Japan, that they had not understood in depth the business dealing means of Japanese. eBay rather than modifying the American-centric service model to match the Japanese market needs, they thought we would force the Japanese consumers to match in to the current American-centric company service model.

eBay incurred commissions as high as 5% and required acutely risk-averse Japanese users to submit credit card information on signup. This service model did not match the Japanese. A lot of the internet savvy people come from the young Japanese who did not own any credit card. However, Japan was a essentially cash-based modern culture, they preferred to cover purchases with cash or through bankers transfers rather than online mastercard payments.

This has therefore resulted in the poor sign-up figures after the introduction of eBay Japan.

Misunderstanding 2 - Failing to seek the services of the right person

eBay Japan also erred in selecting for country brain. In the selection of country manager, the issue of language is overplayed. They are able to actually work with a bilingual executive assistant, translator, or interpreter for a small percentage of what it costs to hire a country director. Making vocabulary skills a key recruiting criterion severely reduces the pool of potential prospects.

Rather than focus on dialect skills, eBay Japan has didn't care about the truly important things, just like a country manager's proper thinking potential, his background managing comparable businesses, industry knowledge, and, ultimately, if he can efficiently build and encourage a local team, introduce new products, and gain market show in an extremely competitive market. "

In Japan group framework, the HR business in a leading Japanese company is at the top of the hierarchy. In america, it's in the bottom. It should be empowered, it must have top people, it must engage with people--it's not about recruiting-eBay Japan acquired failed to make use of the skills of Japan based mostly foreigners who had a long time of valuable experience managing in Japan, as well as relevant industry knowledge and contacts, who are able to help successfully understand Japan market entry, smoothen interactions between head office and Japan-based operations.

Misunderstanding 3 - Unprepared for new Culture

eBay Japan did something that American companies are notorious for, something that had cost them dearly--namely, they made grandiose announcements about their access in to the Japanese market, prior to they had a localized product ready to release in Japan.

While missing the first mover edge was perhaps eBay's Japan solitary biggest blunder, the lack of traction force in Japan for eBay products possessed too triggered the inability of admittance.

Therefore, with the culture impact, eBay has didn't permeate the Japan market as eBay Japan had not been accepted greatly by japan in terms with their accessibility to Japan and their working style when operating the online auction services.

The Current Position of eBay

To recap, eBay Inc. attempted to open its popular auction service under its subsidiary eBay Japan set up in 1999, withdraw in March 2002 after failing to record significant market talk about against Yahoo! Public sale.

Ebay partnered Yahoo! Japan, the Japan biggest portal offering online auction services. Together both companies designed another standalone site, Sekaimon. English meaning for japan term "Global Shopping". Sekaimon site can translate items listed on eBay into Japanese, benefit payments, shipping and delivery and traditions clearance for Japanese buyers.

The alliance benefits users of both sites. Retailers can reach out to a wider audience because of their goods, meanwhile purchasers will in a position to choose from a richer selection of products that are on offer. The impact of the offer will mean more using areas. For instance, U. S. music fans can easily purchase lots of the limited model CDs that Traditional western music artists release in Japan, while Japanese movie enthusiasts will be able to find a wider selection of DVDs that aren't available locally.

Ebay users to have an easier time buying Japanese goods that are popular in foreign countries, such as popular "manga" comics books, CDs and items that feature Japanese computer animation heroes and mascots. Yahoo! Japan users can login utilizing their Yahoo! Japan Identification and purchase translated eBay items with customize Japanese menu and online agent support.

Hence, to be able to attain their eye-sight, eBay must triumph over various issues such as dialect barriers, government restrictions, internet access and cultural dissimilarities. Ebay try to deal with the challenge of conducting transactions in multiple dialects, where the retailers interact in one language and audience in another.

Sellers using eBay's Japanese site, Sekaimon, who want to offer their items on any English terminology eBay sites can enter descriptions as high as 200 Japanese characters and have them translated inside a day for about $12. 34. By allowing this translation service, it can help to boost and introduce more Japanese products into eBay sites. Thus, eBay has successfully turned an effort to its global expansion into a new earnings stream while increasing its value proposition.

eBay has a substantial challenge in dealing with cultural distinctions, such as high uncertainty avoidance culture in Japan. eBay is interacting with this by structuring proper partnerships with reliable entity when it struck a package with Yahoo! Japan, after numerous tries yet failing to penetrate the market individually. eBay adopts localization strategy, where it replicates smaller and culturally very sensitive portions of its content in specific marketplaces such as Japan and China. By doing so, it value adds towards guaranteeing easy consumption and adaptability in new or low tech market segments.


eBay made all the wrong goes in their attempt to expand their services to Japan. Not hiring the right people that can competently study the marketplace in Japan to know if it's a feasible business preposition to even make an effort the creation of eBay Japan.

eBay did not understand the culture in Japan. Basic business ventures to a overseas country requires everyone to comprehend and use the social styles. eBay tried to push their American centric service model after the Japanese people, it'll never work unless they were the first ever to setup the service in the united states where people might just think that, that is the way

eBay didn't focus on the occurrence of Yahoo! Japan Auctions and travelled in blind. To make matters most detrimental, they announced their plans and created a significant fanfare to journey their way into Japan way before they might even set ft. in the country. It's like sharing with the enemies at warfare, "We're coming from the south island at dawn".

Recommended alternatives

Conducting a business in virtually any country requires business planners to conduct considerable market research, sampling the market sentiments for products or services that are to be introduced in to the country. The people after all, are the resources of income. How do a business sell something or service to folks of a new lifestyle, who've different needs and understanding of how they want to be sold something or product?

After identifying what the people want, the business should consider opponents and their position in the market as well. Assess their own size and see if they're able to go up against over a head-on battle or to find a niche market to carve out a position for themselves and slowly expand after that.


The most significant point one of the alternatives that is preferred to eBay during the new set-up is to recognize what their market wants. It really is very important that the barrier for entries be recognized prior getting into any non-localized businesses. It is very important to understand the culture of the prospective audience, understand the needs and the wants of the target audience before getting into a whole new market that the business has never experienced their presence before.

It very important to comprehend the way of the target audience before entry, in which, identifies the current challengers in the market. The existing market share of the opponents, the amount of competitors on the market and how does the prospective audience treat this competitor.

Need be, make a jv with existing service provider that has recently penetrated into the market in order to leverage on their expertise and also the expertise of local talents and foreign talents living in the country.

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