Chapter 20 The first section looks at how Taobao PK off eBay eBay

EachNet was established in August 1999, was fully acquired by eBay in June 2003, and changed its name to eBay EachNet. At the end of 2003, eBay EachNet's share in the international C2C (Consumer-to-consumer) online trading market was as high as 80%, and it was definitely a big brother in this market.When eBay, the global C2C online trading giant, was about to conquer China's online trading market, it encountered Taobao (hereinafter referred to as "Taobao"), which was rising in China. Taobao was established in July 2003, but in just two years, it surpassed eBay and EachNet in the domestic C2C market share and became the No. 1 brother; from 2007 until now, it has been the No. 1 brother, with a stable market share. Keep it above 80%.

What happened to make Taobao surpass eBay and EachNet, and leave it even more?In addition to eBay and EachNet, there are many new online trading platforms in China, such as Tencent's Paipai.com.They are very similar to Taobao in terms of page, software, and operation, and Taobao’s business model is no longer a secret, but why these new online trading platform websites cannot surpass Taobao, while Taobao can still maintain more than 80% of the market What about the market share? The goods on the C2C online trading platform are all-encompassing and consist of many independent buyers and sellers, just like a market.Whoever can provide a better shopping or selling experience for buyers and sellers in the market will be able to successfully attract buyers and sellers and occupy the market.Taobao can become a big brother, it must provide a better market shopping experience in all aspects; and eBay's defeat is definitely a violation of this essence.

What is the shopping experience at the bazaar?For sellers, they need low operating costs, a stable operating environment, a large number of popularity and high-quality supporting services.For buyers, they need excitement, a wide selection of products and peace of mind. 1. Low operating cost Since eBay's profit model is to charge various fees to users, eBay EachNet charges sellers a product listing fee from the very beginning, regardless of whether the product transaction is successful or not.In addition, eBay EachNet also charges buyers and sellers a transaction fee of 2% to 5%.This kind of charge is actually very reasonable. If the seller wants to do business through the eBay eBay platform, he must pay the fee to the trading platform.This is equivalent to the seller needing to pay shop rent to open a ground store.

However, the emergence of Taobao has brought an innovative business experience for sellers, that is, to open a store on Taobao, both the store opening fee and the product registration fee are free.In addition, Taobao also waived transaction fees for buying and selling.This is definitely a better experience for sellers, because the operating costs are reduced. Since its establishment, Taobao has adopted this free strategy to attract sellers to gradually relocate to Taobao to open stores.Some sellers have not accumulated reputation on eBay because they have not been on eBay for a long time, so Taobao's free strategy attracts these eBay sellers to Taobao.As for those sellers who have worked hard on eBay for a period of time, because they have accumulated a certain reputation, they also set up shop on Taobao, but they mainly sell goods on eBay, but the actual transaction is on Taobao, because eBay requires transactions. fee, but not in Taobao.

But is free everything?For sellers, if the place is busy with people and there is business to do, the seller will not mind paying a reasonable fee.Although Taobao's free strategy has attracted some sellers, eBay EachNet still has a certain scale and has a certain guarantee of popularity, and still attracts most sellers and buyers. At the end of 2003, eBay EachNet's market share The sales rate is still as high as 80%, but Taobao has gradually gained popularity, and its market share has increased to 8%. 2. Stable operating environment In addition to low operating costs, a stable operating environment and a stable trading platform are also important for buyers and sellers.The instability of the trading platform will definitely damage the shopping experience and business experience of buyers and sellers.

In September 2004, eBay EachNet officially connected to eBay's global trading platform.However, a problem arose. First of all, the page format, transaction procedures and credit evaluation mechanism of the eBay EachNet website have all undergone major changes, making eBay EachNet's old users uncomfortable. Secondly, because the server of the website has been moved from China to the United States, every click of the user has to go through the Sino-US submarine optical cable, which makes the data transmission time and user waiting time significantly longer.On the contrary, before the access, the website server is located in China, and the data transmission time and user waiting time are obviously much shorter.As of June 2004, 60% of the 56K dial-up Internet users in China still make the data transmission speed between China and the United States appear slower, and also make the display speed of eBay EachNet's webpage slower.During peak hours, eBay eBay even experienced a situation where the "webpage cannot be displayed". It is like buyers and sellers wanting to enter the market to do business, but they are blocked outside the door and are not allowed to enter.This definitely affects buyers shopping and sellers doing business.

Furthermore, since eBay EachNet must be integrated with eBay's global trading rules, many local products do not comply with the rules. The number of products dropped from 780,000 before the integration to 250,000 after the integration, a full decrease of 67%.This makes both sellers and buyers feel that the scale of eBay EachNet has suddenly become small, and there is no experience of high traffic flow. In contrast, Taobao has done a good job in terms of platform stability.Taobao's website server is located in China, and the display speed of the webpage is obviously faster than that of eBay.In addition, at the end of 2003, shortly after Taobao was established, it asked SUN to design and restructure the website.This is one of the most successful cases that SUN has done in China.In addition, Taobao continues to optimize the bottom layer, develop new functions, and modify the structure according to the actual situation, instead of blindly integrating with eBay globally like eBay EachNet.Therefore, Taobao's stable technology gives users a better experience.

Due to the instability of eBay EachNet, the business environment deteriorated. Just 10 days after it was connected to the eBay global platform, a large number of users fled eBay EachNet and opened stores on Taobao, which is free and stable.As a result, the passenger flow of eBay and EachNet has been greatly reduced, while the passenger flow of Taobao has been greatly increased. 3. Buy with confidence (1) Communication between buyers and sellers In order to ensure transaction fees, eBay prohibits buyers and sellers from leaving phone calls, discourages communication before buying and selling, prevents buyers and sellers from conducting private transactions, and only allows the contact information to be left after the transaction.This violates the shopping habits of Chinese people.Chinese people always have to ask clearly about the product before shopping.Therefore, Chinese people are not used to this model of eBay and EachNet, and they are not at ease when buying.

Since Taobao does not charge transaction fees, it encourages buyers and sellers to communicate directly through mobile phones or instant messaging software before the transaction, so that buyers can learn more about the seller and the product, so that buyers can buy with more confidence.Taobao immediately launched the real-time communication software "Taobao Wangwang" (now named "Ali Wangwang"), allowing buyers and sellers to communicate directly. The user interface of "Taobao Wangwang" is similar to that of "Tencent QQ", another most popular instant messaging software in China, which makes both parties feel more intimate.This will make Taobao buyers more at ease.

About two years after the launch of "Taobao Wangwang", eBay purchased the real-time communication software Skype on September 12, 2005, but at this time it has lost its opportunity. (2) Online payment security In addition to "Taobao Wangwang" to make buyers feel at ease, Taobao launched the online payment system "Alipay" in October 2003 shortly after its establishment.Online payment was always regarded as the biggest obstacle to the development of online shopping. The advent of "Alipay" has completely solved the problem of online payment, so that both buyers and sellers are guaranteed.

After Taobao launched "Alipay", eBay EachNet also plans to introduce the PayPal payment system in the United States, but eBay, as a foreign company, cannot obtain an electronic payment license issued by the Chinese financial management department. eBay EachNet only developed its own online payment system, and launched "Anfutong" similar to "Alipay" in October 2004, which was a full year behind Taobao and lost the opportunity again.At this time, the number of Taobao users has exceeded 3 million, and user stickiness has formed to "Alipay", and "Alipay" is still improving. eBay only successfully introduced PayPal on July 11, 2005, but its role is no longer significant. (3) Refund In February 2005, Taobao took the lead in launching "full compensation". As long as "Alipay" is used in transactions, "Alipay" is responsible for full compensation when problems arise.Soon, 70% of the transactions on Taobao supported the use of "Alipay", and the number of users of "Alipay" also rose to 2 million. Taobao not only solves the online payment problem, but also solves the refund problem. On June 9, 2005, eBay EachNet stated that "Anfutong" also implemented "full compensation", but it was 4 months behind Taobao, and once again lost the opportunity.This once again shows that Taobao is always one step ahead to provide users with a better experience. 4. Supporting services Logistics delivery is also another problem of online shopping. Sellers need to contact the courier company separately, but the delivery fee is expensive.However, Taobao's "recommended logistics" allows sellers to save these troubles.Taobao cooperates with more than 10 courier companies. Sellers only need to choose the courier company they like on the Taobao website, and they can directly send the order online, and then the courier company will come to pick up the goods; sellers can also track the order online.In terms of delivery fees, Taobao negotiated fees with express companies based on its existing scale, which reduced the national express delivery fee from 15 yuan to 8 yuan.In this way, the seller's operating cost is reduced, and the total price of the buyer's goods is also cheaper. In addition, Taobao's product placement period is as long as 14 days, and it can be automatically extended for 14 days, which is much more flexible than eBay.Taobao not only sells products for free, but also has a long shelf life, so sellers choose to sell products on Taobao. 5. Popularity scale Taobao's free store opening, stable trading platform and comprehensive supporting services have attracted more sellers to set up stores on Taobao to sell their products.More products will naturally attract more buyers to Taobao shopping.More buyers attract more sellers at the same time, thus forming a virtuous circle, making Taobao more popular and growing in scale.Both buyers and sellers love a popular and large-scale market. Since Taobao was established, it has been providing buyers and sellers with a better market shopping experience and business experience. Therefore, in the first quarter of 2005, Taobao’s transaction volume reached 120 million yuan, surpassing eBay EachNet for the first time; September 2005 , the number of Taobao products is 10 million, which is 10 times that of eBay.And eBay EachNet once even withdrew from the domestic C2C market at the end of 2006. (See Figure 4-2) Taobao’s business model is no secret. In recent years, emerging competitors have copied Taobao’s business model. But why can’t Taobao’s leadership be challenged? 1. Take Paipai.com as an example Paipai.com (www.paipai.com, hereinafter referred to as "Paipai") is an e-commerce website owned by Tencent, which announced its official operation in March 2006.Relying on Tencent's huge user base of more than 740 million and 300 million active users, in 2007, Paipai ranked second in the domestic e-commerce platform with a transaction share of 8.7%; in 2008, the market share rose to 9.8%. Continue to occupy the second place in the domestic e-commerce platform. 2. Similarities between Paipai and Taobao Like Taobao, Paipai adopts the strategy of waiving store opening fees and transaction fees to reduce operating costs for sellers.Paipai allows buyers and sellers to communicate directly through "Tencent QQ", similar to Taobao's "Taobao Wangwang".In terms of online payment, the operation of Paipai's "Tenpay" is also similar to Taobao's "Alipay".In terms of refund protection, Paipai also has "payment in advance", that is, within 14 days after the buyer confirms the receipt of the goods, if there is a quality problem, he can apply for "payment in advance" from Paipai; there is also a "7-day guarantee" service, That is, if you are not satisfied within 7 days after confirming receipt, you can apply for an unreasonable refund; there is also "genuine fake one pay three", that is, within 14 days after the buyer confirms receipt, if the buyer finds that it is a new product that is not the original factory, You can apply for compensation of 3 times the actual price of the goods paid.This series of refund guarantees is also similar to that of Taobao. 3. The scale of Taobao cannot be copied However, Paipai does not have a service similar to Taobao's "recommended logistics".The reason why Taobao can launch this service is because Taobao can use its huge scale to negotiate discounts with logistics.On the contrary, Paipai does not have this scale as a bargaining chip.Because Taobao's market share is so large, it is enjoying the advantages of its economies of scale, making it difficult for other competitors to challenge its position.