EBay is a popular auction site in the US and other countries, but the company recently struggled with moving into Asian markets. There were several reasons for these problems. This paper addresses the 4Ps and how they played a role in eBay's successes and failures when it came to the Asian markets. While eBay was able to move into some of those markets, it had too much competition in other markets to be successful.
International Business Model I
International Business Model: eBay
In order to understand the international market and what eBay has to offer in that market, it is important to discuss the company in light of the 4 Ps (product, place, promotion, and price). That can provide a better understanding of why eBay failed in some Asian markets and why it struggled for some time before seeing success in others. While eBay is a highly popular site in the U.S., the UK, and a few other countries, that did not mean it could automatically move right into Asian countries or others and do just as well. There were issues it had to address, and some unexpected difficulties that appeared even though the company did not feel it would have to worry about them and/or thought it had covered all the bases with the particular country into which it was moving.
EBay's product was not really an issue for the company when it came to being successful or not being successful, because eBay itself does not actually have a product (Cohen, 2002; Walton, 2006). Since it is an online auction site where people go to sell all kinds of different things from clothing to jewelry to cars, a person can find almost anything for any price on eBay. Product matters in the global business marketplace, but with an auction site the only real product is the availability of the site itself. Of course, sellers on the site can make their own determination of whether they want to sell something and whether they are willing to ship it to a particular country (Jackson, 2004). If the majority of people do not want to ship to Asian countries or there are very few individuals in Asian countries wanting to sell items through eBay, there will not be enough of an interest in the site for it to be successful in that country. EBay encountered some of that problem, and was not completely prepared for the number of people who were uninterested in using the site or who were already using a competitor.
Place was another issue for eBay that was really a non-issue. From a global business standpoint, place is generally insignificant and/or unimportant for an online company (Nissanoff, 2006). EBay is strictly an online auction site, so anyone using the site to buy or sell something generally expects to need to ship something to the seller. In other words, individuals who want to buy something should expect to pay shipping, and individuals who want to sell something should not expect to have to allow the buyer to come to their home. However, some of the items on eBay are large and heavy, and those items would have to be picked up by the buyer or delivered by the seller. It is also important to be aware of the shipping costs for buyers in other countries, because that can play a role in how successful eBay is in a particular country (Cohen, 2002; Jackson, 2004). If most of the sellers are located outside of the buyer's home country, that buyer may not want to use the sight because of the extra cost for having the item shipped.
Promotion is a big issue for eBay (Nissanoff, 2006). Just because the company is nearly a household name in the U.S. does not mean it is that popular in other countries. Because that is the case, it is very important that the company promotes itself properly and that everyone who might be interested in using eBay hears about it. Still, the way eBay promotes itself has to be different in different countries, and when it moved into Asian countries the culture was different from the countries in which eBay had been operating in the past (Cohen, 2002). Anytime the culture changes, the promotion strategies also have to change. If they do not, it can be very easy to miss out on great interaction with future customers because the company has not focused itself on understanding the individuals to which it is trying to market its goods and services. EBay was guilty of this in Taiwan and Japan, two countries where it failed partially because it was not able to promote its auction site as being better than the options the countries already had, and partially because it did not move quickly enough.
Price is another non-issue for eBay, because the prices for items are set by the sellers and not by the site itself. If a potential buyer does not like the price of the item he or she wants to buy, that buyer can simply avoid purchasing the item and go on to get something else from another buyer. Because eBay does not set the price for the items that are purchased through its site, there is no argument as to whether it charged too much to be successful in the Asian markets. The success (or lack of) that eBay had in Asian countries came more from other issues that were unrelated to how much the sellers on eBay's site were charging for the goods they were selling to others. The largest problem was not one of money, but was one of cultural clashes that were not well understood (Walton, 2006).
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