Thinking "Glocally" - eBay International and the Challenges of Entering p2p Markets

On-line auctioneers eBay turned a remarkably simple business model into a global success story. Unsurprisingly, this has given rise to a slew of imitators. The Roland Berger Chaired Professor of Business and Technology at INSEAD, Soumitra Dutta and case writer Subramanian Rangan focus on the company's not so smooth experiences in France and Japan. eBay's country managers faced very different levels of competition in each market - a local but well-established firm in France, and the internet behemoth Yahoo! In Japan.

by Soumitra Dutta,Subramanian Rangan
Last Updated: 23 Jul 2013

In an era when dot com companies were crashing and burning by the thousands, on-line auctioneers eBay managed to make a remarkably simple business model a phenomenal global success. Unlike other major internet firms, eBay's customers provided most of the added value. The company neither takes possession of auctioned articles, nor handles any related merchandise, documents or funds.

Naturally, its very high-profile achievements spawned a host of local imitators as it expanded into markets around the world. It soon found itself being forced to raise its profile in certain markets aggressively, for fear of being shut out.

The Roland Berger Chaired Professor of Business and Technology at INSEAD, Soumitra Dutta focuses on the companies not always smooth experiences in France and Japan. eBay's main competitors were, respectively, well-positioned domestic firm iBazar and international giant Yahoo! By the time eBay entered the French market in late 2000, e-commerce was already very well established. iBazar had a fairly comfortable foothold, built largely through adapting the eBay model.

In Japan, the world's second biggest p2p e-commerce market, Yahoo! had far deeper pockets than eBay's main rival in France. The corporation had made a point of channelling customer traffic to its auction site, while also borrowing liberally from eBay's overall business model.

The author examines the tactics adopted by eBay's country managers in both markets. Matt Bannick in Japan, in charge of the company's international operations, also had the somewhat daunting task of delivering enough growth in profitability to start justifying eBay's quite phenomenal Wall Street trading premiums.

In addition to the challenge faced in these two very different markets, eBay was also being forced to consider the bigger picture of the global p2p market. How could technological platforms best be set up to support one of the corporation's top priorities of greatly expanding cross-border trading? The author details eBay's eventual grand strategy; look "global on the inside, but local on the outside". While uniformly applying an international platform, the company tailored its operations in accordance with the size and developmental stages of its markets in the various countries in which it operated. This "glocal" strategy has proven itself a glowing success. In 2001, eBay was the only major internet-based firm in the USA to report both steady and increasing profits.


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