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Custom E-Bay Website Essay

The eBay website was launched in 1995 by computer programmer Pierre Omidyar, after he saw the potential profitability of using public auctions as a marketing tool. Ebay’s first mover position ensured that by the time competitors entered the market it was already well established. A visionary management team coupled with increased revenues and profits facilitated the acquisition of other companies and expansion into foreign markets.

EBay’s expansion into Japan in February of 2000 could be used as a case study for other companies planning to expand into foreign markets.

Considerations that need to be made before the entry into a new market for an e-commerce firm.

The factors that need to be considered before entry into a foreign market are similar for an e-commerce company and any other company dealing with importation and sale of products.

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Before entry, the competitors who have already established themselves in the market need to be considered. Investigating their pricing structure and how they position their products offer may offer insight into consumer preference. The investigation is crucial in ensuring that the company’s products are able to compete favorably in the new market.

There needs to be a comprehensive market outlook into the foreign market to determine whether the market has the potential to expand. This research enables one to identify target markets where there is a high rate of growth and low inflation rates. Research into the market also helps in determining a fair price for the company’s products, considering currency exchange rates that will appeal to consumers as well as be profitable to the company.

The e-commerce company needs to investigate the laws that relate to it. To establish if there are quotas or subsidies offered by the government to either regulate or promote international trade. Reduced restrictions would encourage the e-commerce company to enter the new market. Stiff restrictions inflate costs and reduce the viability of a foreign market.

The company also needs to consider distribution systems for its products, identifying a suitable distribution channel will ensure products are imported and distributed efficiently and cheaply. The existence of such a system would encourage entry into the market.

Why EBay failed to achieve their objectives in Japan.

In Japan, Yahoo! Japan Auctions was the first mover. They set up base in Japan in September of 1999. By the time eBay announced its planned expansion into Japan, Yahoo! Japan Auctions was already the leader of the auction market in Japan. Yahoo! Japan Auctions prepared well for the eBay’s entry. Their aggressive campaigns asserted their position as the leader of the auction market. Two years after eBay’s entry it reported that Yahoo! Japan still dominated 95% of the online market. Statistics show that Yahoo! Japan Auctions had 2,746,000 unique visitors to eBay’s 227,000 in 2001.

EBay introduced new practices that were unfamiliar to the Japanese. EBay’s payment method required customers to submit credit card information. This did not wash well with people who were accustomed to payment upon delivery. People were also weary of disclosing information online due to the prevalence of malicious software online.

EBay overlooked demographics in Japan.  In Japan the greatest majority of its population is young people. Most of them did not own credit cards, thus they could not buy goods from eBay. Since e-commerce was rapidly becoming the preferred method of trade they ended up buying and selling their goods on Yahoo! Japan.

EBay commissioned a team that was unfamiliar with Japan and the internet to spearhead its operations in Japan. Merle Okawara despite being an accomplished business executive was relatively unfamiliar with the internet business compared to internet mogul Jerry Yang and his CEO Masahiro. The team was also unfamiliar with Japan culture evidenced by the long duration it took them to set up a better customer friendly website. (Haghirian,  72-73)

A company considering expansion should try to incorporate its product into the existing culture of the people, in a bid to make its products more acceptable to the people. It should retail its products at prices cheaper than or equal to its competitors in order for it to be appealing to customers. More importantly the company should be lead by a competent team, well informed in the field.

Conclusion

One cannot over emphasize the importance of using case studies, in decision making. Experience is the best teacher, thus studying other people’s experiences better prepares one for the realities of life. Care should be observed when choosing case studies since some regions are highly diversified. A case study on a business in New York will not be of value to a business in rural Texas, since the culture is different. One is a developed region and the other is not. This case study will be highly appreciated by a business in Tokyo.

Custom E-Bay Website Essay

Code: Sample20

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