How did JackMa's Alibaba crush ebay?
As a youth, Jack Ma, the founder of Alibaba learnt English from the tourists of Hangzhou and became an English teacher. After that, he launched a translation company and travelled to US for the first time in 1995.
Story of Jack Ma
The project failed but he learnt something important "the certainty that the Internet was about to change everything".
Failure Before Success
The same year, he created 'Chinapages', but it was too early and nobody invested.
In 1999, Jack tried again and raised 25 million dollars from investors and Alibaba was born.
Birth of Alibaba
The concept was simple: allow Chinese manufacturers to list their products online in English so Western companies could easily find and buy from them.
In 2004, eBay was planning to conquer China’s young cyberspace. But Jack Ma saw the threat it posed to Alibaba.
The Confrontation with eBay
Given the resources of eBay, it could easily branch out to Alibaba’s B2B business. So, they decided to strike first and created Taobao, a C2C platform.
To compete with Taobao eBay pursued aggressive marketing campaign. eBay signed exclusive ad contracts with the top Chinese portal such as Sina and Sohu. They also invested additional 100 million dollars.
Alibaba vs eBay
But Chinese “webization” was far from complete at the time. Understanding that well, Alibaba focused on TV ads, which gave a much better return on investment.
Strategy of Alibaba
But what really killed eBay was his pricing policy. It was FREE. While eBay charged the listing of products on its platform, Alibaba let sellers do it for absolutely nothing.
Strategy of Alibaba
Alibaba adapted the platform to better respond to Chinese consumers when on the other hand eBay refused to deviate from its global strategy. Two years later, the challenger became the leader.
Exit of eBay
eBay wasted money on the wrong kind of advertising, refused to adapt, didn’t hire local management, even moved their server infrastructure leading to a slower connection.
Why eBay failed?
Today, Alibaba is the leader of the Chinese eCommerce market with its two platforms Taobao and Tmall.
Internet is always reinventing itself with innovations. As a result, some of the early web empires are today only distant memories just like eBay in China. Know more about such strategies.