E-Commerce C2C

C2C (customer-to-customer)

Consumer-to-consumer (C2C) involves the electronically facilitated transactions between consumers through the agent, a common example is the online auction, consumer posts an item for sale and other consumers bid to purchase it; the agent generally charges a flat fee or commission. The sites are only intermediaries, just there to match consumers. They do not have to check quality of the products being offered.（source: C2C）

 It helps the online dealing of goods or services among people. Though there is no agents needed but the agents will not fulfill the transactions without the program which is supplied by the online market dealer such as eBay.

            

These are the two famous organizations engaged in this type of e-commerce from my home country.

The first one is Taobao.com, The term “Tao Bao” literally means “to search for treasure”, and implies that no treasure will go unfound when using their website. It is one of the most famous e-commerce website in china; Taobao.com is the site that killed eBay China. Created in 2003 by the Alibaba group; Taobao received 450 million RMB in funding to become China’s top C2C, B2C platform. Now Taobao.com is the largest online retail giant in China.

Paipai.com (means “auction auction” in Chinese) shares a great similarity with Taobao. It is the second largest E-commercial platform in China, and supports China’s most widely used instant messaging tool: QQ. This gives Paipai immediate reach with QQ’s already established user base, by directly integrating into QQ’s interface when loaded.

In the modern society, change of e-commerce is very important to influence the business model since e-commerce has been revolutionizing the business world.

With this phenomenal growth of E-Commerce, anyone can open a business on an international level 24 hours a day, no matter where the business is physically located. In other words, one location can serve the business needs over the global world. Because the customer, or client, base of a business is able to grow on a global scale, the potential for profit has skyrocketed

(Source: Ecommerce: A great change for the business world)

E-Commerce is quickly becoming a major source of business throughout the world. As the Internet continues to grow and influence our lives even more, there is no telling how far e-commerce will develop.

Customers prefer e-commerce Websites for a number of reasons:

1)      The selection of items is diverse.

2)      Instance chat available.

3)      No limited products and services in the mall that you can carry.

4)      Comparison shopping is quick and easy.

5)      And you don't have to leave your home to go shopping.

Ron Z. Mendelson, recognized expert on offshore business, and director of offshoreXplorer.com states "The absolute freedom associated with offshore E-Commerce is a highly attractive option in today's business world. With the need for a competitive edge in the global market, the offshore E-Commerce business can give a business the boost it needs and it can give the business operator a greater profit and more peace of mind."

(Source: E-Commerce Brings the World to the Doorsteps of Businesses Everywhere)

C2C trading has varies of forms throughout the world. Consumers have been known to sell cars, books and many other products as a specialty.

In Australia, one of the most recognized trading marketplaces is found on tradingpost.com. The trading post is located in all local newspapers, but in the early 2000's trading post moved to an online marketplace. The same advertisements done in the paper are shown online and the online version is currently run through service provider Bigpond in order to gain larger exposure to the wider community. The site uses provider PayPal to make purchasing and selling of goods more secure.

My favorite country that uses C2C trading is United States, which develops the e-commerce market a lot. For example, Autotrader.com is a website in U.S, which is known as the largest consumer driven marketplace for Car Sales in the North American region. It allows buyers to do what they can on sites such as EBay, but as a specialty for cars. Price ranges, certain models and year makes are just some of the specifics to search for and the ease of use offered by the site gives consumers even more motivation to use the website for their car shopping. The PayPal method is used and a location finder for easy and convenient sales is some marketing ploys the website relies on.

There is a different business philosophy between my hometown China and United States, for example, eBay in U.S and Taobao in China. EBay is the only western counterpart that compares to Taobao. Although EBay has local site in China too, its inability to adapt to Chinese local needs led to its failure, and now exists as a business portal, rather than the C2C powerhouse it is overseas.

The other important difference between China and United States is business relations.  When doing business in China, be prepared for much socializing.  Business becomes secondary as the parties get to know each better.  If it delays a contract, that is perfectly acceptable as long as the correct social time is allotted for.  In America, business associates are usually more aloof.  There might be some social gathering but the business is more important and the socializing will be sacrificed to get the job done if needed.  Though there seems to be shift in America regarding this.  The recognition of networking is becoming more pronounced.

How eBay lost the China market

Published: 09 Aug 2009 20:02:01 PST

By Sherman So and J. Christopher Westland
Editor’s note:
This article has been adapted from Red Wired: China’s Internet Revolution co-authored by Sherman So and J. Christopher Westland. The to-be-published book is aimed at helping readers gain a firsthand understanding of how the Chinese combined successful components from their Western counterparts with innovation, to accommodate the unique characteristics of the Chinese market.
Many believe Taobao beat global online auction king eBay in China by being free, but not EachNet founder Bo Shao who sold the company to eBay in July 2003. A key catalyst was “migration”, the decision to terminate EachNet’s homegrown technology platform and move all EachNet users to the eBay US platform, said Shao.
On the day of the migration, traffic to eBay China dropped by half. Despite the serious customer losses, Meg Whitman, then CEO of eBay, only learned about it a month after it occurred, on a visit to Shanghai.
Whitman was shocked and very upset. Apparently, even the head of eBay International at the time, who was one of the most ardent proponents of migration, did not tell Whitman about it.

By 2003, eBay’s global expansion plan had reached China. It completed its acquisition of the country’s dominant auction player, EachNet, for $180 million in July 2003. EachNet at the time had more than 2 million users and about 85 percent of the market.
EachNet’s market dominance was so strong that Shao started charging listing and transaction fees in 2001, despite the existence of free competing sites. He believed that as long as the site had the most buyers and made money for sellers, the sellers would be willing to pay. According to Shao, fees did not affect user loyalty; in fact, EachNet’s dominance increased after it started charging.
After the acquisition, Shao retired from daily operations of eBay China and moved to the US in late 2003 with his family. eBay sent in a number of expatriates from Germany, the US, Korea, and Taiwan to run the China division and hired a number of senior executives from other multinational corporations in China.
The company thought everything would be fine. After all, EachNet, now eBay China had an overwhelmingly dominant position and it planned to spend an extra $100 million to improve its technology platform and promote eBay’s brand in China. Any new competitors would be easy to crush.
However, nothing went according to plan. A new rival came out of nowhere and eBay retreated from China four years later.
Rise of Taobao
After Alibaba started making profits on its main B2B site, its founder Jack Ma took aim at the potentially much bigger C2C (consumer-to-consumer) market. Ma gathered a small team working in secret. By May 2003, the website Taobao, which means “looking for treasure” in Chinese, was launched.
While eBay was busy consolidating EachNet into its global operation, Alibaba was plugging Taobao as a new online shopping destination. And unlike its American-owned competitor, Taobao was free!
But levying listing fees and transaction fees was not the only reason eBay lost its dominance to Taobao, said EachNet co-founder Shao, who, after selling the company to eBay in July 2003, stayed on as a consultant for over a year.
“At first, even with Taobao making a lot of noise, our users and traffic did not change much,” said Shao.
Despite having to pay fees, the larger user base of eBay China was more than enough to keep sellers coming. Similarly, most buyers stayed on, as there were more sellers and products offered.
In fact, latecomers seldom posed a serious threat to the dominant online auction player. They might capture some market share, but rarely a big chunk. Latecomer Yahoo’s free auction service in the US had scarcely any effect on eBay’s market dominance.
What really caused eBay to lose its dominance in China was its decision to move its technology platform from China to the US, said Shao.
Internally, it was called “migration”, which was the project to terminate EachNet’s homegrown technology platform and move all EachNet users to the eBay US platform in October 2004.
Whitman, then CEO of eBay, had a vision – she wanted all eBay users, wherever they were, to be able to trade with each other. For example, users in the US could be able to see products offered by users in China and bid for them.
To implement her global vision, eBay’s technology platforms in different countries had to be moved to the headquarters, consolidated and put under the control of the company’s chief technology officer.
The former EachNet management supported the vision, according to Shao, but felt that it was premature to migrate EachNet users to the US platform, which was not yet flexible enough to accommodate the China-specific features that EachNet needed to compete in China. EachNet’s technology team was also concerned about transmission speed issues across the Pacific. Such concerns, however, were downplayed during the eBay technology team’s presentation to Whitman.

The beginning of the end
“On the day of the move, traffic (of eBay China) dropped by half,” recalled Shao.
What had been information flow within China now became traffic across borders and across the Pacific Ocean. However, the Internet infrastructure between China and the US was not very good. The loading speed of eBay China’s webpage, one of the most important user issues, slowed dramatically.
What’s more, the Chinese government by then had built its “great firewall” to block any traffic of which it disapproved. The censorship was quite tight – anything that looked suspicious would be blocked and the foreign computer server that processed the problematic information would be banned for anywhere between 24 hours to several days.
The slow and unstable services frustrated users and caused them to leave eBay China in droves. The presence of Taobao as a better alternative, further sped up its popularity.
But, the news did not get to Whitman until a month later, said Shao. The head of eBay International at the time was a major proponent of migration and did not tell her about the crisis. It was only when she visited China with Shao and met with the local team that she learned the truth.
Whitman cared a great deal about China and treated eBay China as a strategic priority. Shao recalled that Whitman was shocked and upset when she found out about the problems.
Moreover, the move of the technology platform brought the development of eBay China to a screeching halt.
“In order for the eBay US platform to catch up to EachNet’s China-specific features, development on the site was frozen for a year before the platform was moved,” said Shao. For an entire year beginning in October 2003, EachNet could not develop any new features or make significant changes to existing features.
After the move, the local team lost most of its control on the site. “It took nine months to implement any major changes and nine weeks to even change a word on the website as everything had to go through the headquarters technology development team,” said Shao.
“This is unthinkable,” said Shao. “Fast reaction to user demands is crucial in this market.”
eBay’s downfall
Taobao, meanwhile, was quickly adding new features and making its design more and more appealing to the Chinese users. It added an online chat function that allowed buyers and sellers to communicate virtually before trading. It implemented an online payment solution called Alipay. It made its page design more feminine to appeal to a growing number of female users.
Slow and unstable services and a lack of updates caused eBay China to lose users fast. Three months after the platform moved, eBay China’s market share had dropped to the almost the same level as Taobao, said Shao.
“After that, there was no more reason for users to stay (with eBay China),” said Shao. eBay China had fewer users and worse services than Taobao, and it charged people too.
Six months after the move, Taobao turned the tables on eBay China, capturing 60 percent of the market while its rival languished at 30 percent.
eBay significantly cut its prices to try to compete, and in late 2005 it stopped charging altogether, but it was too little too late. Its market share dropped from 85 percent when it purchased EachNet in 2003 to about 30 percent in late 2005.
By the fall of 2005, although eBay still had more registered users, Taobao had 57 percent of the market transaction volume to eBay’s 34 percent, according to Beijing market research firm Analysys International.
After investing nearly $300 million ($180 million for acquiring Eachnet and $100 million as extra budget for its China push), eBay all but threw in the towel. It folded its China operation into a joint venture with Tom Online, a leading mobile value-added services provider in China at the end of 2006.
Tom Online could not turn the situation around, either. eBay’s market share had shrunk to 7 percent by the second quarter of 2007, while Taobao held 82 percent of the market, according to Analysys International.

Chart: Market share of C2C market (2008)

Source: Analysys International
Note: by transaction volume
Chart: Gross trading volume of China online shopping market (2004-2011)

Source: iResearch

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