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eBay India : The Pinnacle and Plummet of a Marketplace Titan

 Why did eBay India encounter setbacks? Know the top reasons for eBay’s failure in India

Brief Introduction of eBay.com – From Auctionweb to eBay.com

eBay.com, one of the largest and most popular marketplaces, was founded in September 1985 by Pierre Omidyar and named “Auctionweb”. The platform started a way for individuals to buy and sell collectible items. But they very soon added more categories to their list. Over the years, eBay has gone through numerous transformations faced many challenges, and adapted to the marketing dynamics. The first item ever sold on the platform was a broken laser pointer, which fetched an unexpectedly high price. Ebay India was India’s division which was the early days online marketplace in India.

AuctionWeb – Introduction

Auctionweb was a personal project of Pierre Omidyar to buy and sell items at auction in an online format. The company changed its name to eBay officially in 1997. EBay’s name was derived from Pierre Omidyar‘s consulting firm name “echo-bay”.  In the year 1998, eBay introduced its first logo. EBay went to the public to raise capital and establish themselves in the mainstream business world. The initial public offering (IPO) was a resounding success, contributing to the rapid growth of the platform. As eBay’s reach extended globally, it acquired international marketplaces. Such as the acquisition of iBazar in 2001, strengthening their position in Europe.

In 2002, eBay made a good strategic acquisition by purchasing PayPal. A move that made the future of online payments in a smooth shape. The integration of PayPal into the eBay platform streamlines transactions and increases user trust. The synergy between eBay and PayPal led to substantial growth in both entities.

eBay – Continuous Journey

The company continuously innovated to enhance the user experience. The introduction of the “Buy It Now” feature in the year 2000 allowed sellers to list items at fixed prices. It allowed the buyer to purchase the item immediately. The introduction of eBay stores in the year 2001 provided sellers with personalized virtual storefronts, enhancing their visibility and branding.

As the organization solidifies its position as a leading online marketplace, it also faces challenges. The emergence of competitors like Amazon and the proliferation of counterfeit goods on the platform posed threats. eBay responded by implementing more stringent quality control, buyer protection programs, and enhanced seller performance standards.

eBay embraced the mobile revolution, launching its mobile app in 2008. The app empowered users to browse, bid, and sell the items on the go, changing the way people engaged with the platform. This marked the beginning of eBay’s digital transformation journey, which included user interface enhancements, personalized recommendations, and AI-driven search algorithms.

INTRODUCTION OF EBAY INDIA

eBay India, an e-commerce giant, entered India by acquiring Bazee.com for $50 million in 2004 and started selling products on its portal. This move was very strategic as they got a very big customer base in an emerging market as internet users were small in numbers and getting up day by day and this online business started becoming popular. Being an early mover, they have a large customer base with fewer competitors. At that time, there were several methods for buying a product online and one of the popular options was auction.

A buyer can bid according to the auction base price and can get the products at the lowest price. If there is no bidder or fewer bidders, the price does not go up. This was a unique and interesting way to buy antique products, like postal stamps and coins and some antique items. I used to purchase items that I could not find on the market easily.

Continuous Journey – Ebay India

However, they offer collectibles, handicrafts, fashions, and electronics. Some other popular portals like Rediff.com and Indiatimes.com were the competitors of eBay India. Some of the sellers, mainly from the electronic electronics category, were used to selling items on eBay India at that time, as this was the peak of businesses who were selling mobile phone accessories and getting more business from this website, Smartphones were introduced and started being sold in India and buyers started buying accessories for their phones.

The platform was user-friendly and methods were very secure. However, not every credit or debit card holder wants to purchase online. This was one of the bigger challenges. In 2014, eBay introduced a cash-on-delivery payment mode. Before 2014, only a prepaid method was available to purchase the item. It was a C2C portal and encouraged consumers to sell their products on the website. To sell on a website, it is not necessary to have a registered business. An individual can sell products to consumers.

CONTINUOUS JOURNEY AND STRATEGIC MISTAKES  – EBAY INDIA

I started my journey with e-commerce companies in 2006 and work for a mobile phone accessories business company. So, I have seen the ups and downs of e-commerce websites very closely as I have been in this business for a long time. Other players like Flipkart started in 2007 but they were selling books and later moved to other categories, somewhere in 2010, and converted their website in 2011. Other marketplaces like Snapdeal in 2010 and Amazon in 2013 slowed the business of the company, but they did not stop getting good business.

New companies like Flipkart and Amazon invested heavily in marketing, logistics, and technology to get a good share of online customers. However, eBay India did not work on logistics and marketing and once other companies came up with their USP of guaranteed delivery, eBay had nothing to offer. So, in the name of guaranteed delivery and other discounts, they started losing business in a couple of years and somehow lost their customer base.

Cyber Attack on eBay India in 2014

eBay started losing its grip in 2014 when one morning it was news that eBay is a victim of a cyber-attack and its eBay corporate network is hacked and databases of users. were compromised and eBay.com lost 1.73% share price on the same day due to this news. Later, they notified each customer and asked them to change their password. However, the news flashed in May but this happened in late February to March.

EBay spokeswoman Amanda Miller told Reuters late on Wednesday that those passwords were encrypted and that the company had no reason to believe the hackers had broken the code that scrambled them. “There is no evidence of impact on any eBay customers,” Miller said. “We don’t know that they decrypted the passwords because it would not be easy to do.” She said the hackers gained access to 145 million records of which they copied “a lar ge part”. Those records contained passwords as well as email addresses, birth dates, mailing addresses and other personal information, but not financial data such as credit card numbers. Miller also said the company has hired FireEye’s Mandiant forensics division to help investigate the matter. Mandiant is known for publishing a February 2013 report that described what it said was a Shanghai-based hacking group linked to the Peoples Liberation Army.

Payment Modes – eBay India

eBay India implemented Cash on Delivery but very late because, in the beginning, consumers did not feel much confidence in buying products online as they had a lot of fraud with their cards and banks due to less awareness. However, they had a payment guarantee mechanism named PAISAPAY.  eBay introduced its global model to the Indian market. It introduced features like Cash on Delivery (COD) and offered localized services to cater to Indian shoppers’ preferences. However, these efforts were not always sufficient to compete with the deep pockets and extensive infrastructure investments of its rivals.

Indian consumers were increasingly looking for a smooth shopping experience, a wide variety of products, and reliable customer service. eBay’s auction-based selling model, a unique selling method, might not have aligned with the changing preferences of Indian shoppers who sought convenience and assurance in their online purchases.

STRATEGIC PARTNERSHIP of EBAY INDIA WITH FLIPKART AND END OF JOURNEY

In 2017, eBay India entered a strategic partnership with Flipkart, a major Indian e-commerce player. They invested in Flipkart and integrated its marketplace into Flipkart’s platform. While this move reflected a shift in eBay’s strategy, it could also be seen as an acknowledgment of the challenges eBay India faced in maintaining its independent presence.

As a result of the partnership with Flipkart, eBay India’s dedicated marketplace was shut down in 2018. The company chose to focus on its investment in Flipkart and step back from operating a standalone platform in India. This marked the official end of eBay India’s journey as a distinct online marketplace.

In conclusion, eBay India’s downfall can be attributed to a combination of factors such as intense competition, challenges in local adaptation, logistical limitations, changing consumer preferences, lack of focused investments, and strategic decisions. The dynamic and rapidly evolving nature of the Indian e-commerce market, coupled with the unique demands of Indian consumers, poses significant challenges for eBay India’s sustainable growth. The partnership with Flipkart and the subsequent closure of the dedicated marketplace can be seen as a strategic move to reallocate resources and pivot in response to these challenges.

Views of experts on the merger and shutdown of eBay India

Flipkart CEO Kalyan Krishnamurthy in an email to his employees stated that the company will launch a new platform for refurbished goods, immediately succeeding the termination of all customer transactions on eBay.in. “Based on our learning at eBay.in, we have built a brand-new value platform launching with refurbished goods – a large market which is predominantly unorganised… As part of this launch, we will be stopping all customer transactions on eBay.in on 14th August 2018 and transitioning to the new platform,” wrote Krishnamurthy in the mail.

Flipkart-eBay India merger was announced in August 2017 when the Indian e-commerce company had raised USD 1.4 billion from global technology majors such as eBay, Microsoft, and Tencent. eBay announced the end of the strategic partnership in May,2018, stating that it will relaunch eBay India with a different method to focus on cross-border trade.

Suresh Reddy, Chairman and CEO, Brightcom, said, “With Walmart coming in, this was an inevitable outcome. eBay had to be out. It was a clear case of conflict of interests.”

Brand expert N Chandramouli, CEO, TRA Research, believes that eBay will most likely come back. “This shut down is only a change in position, which was necessary after the Walmart deal. It must have been a part of the deal structure. eBay is likely to restart soon in a non-competitive space with Flipkart.” Commenting on the refurbished market, he said, “India is a value conscious market and the refurbished goods segment has been functioning in an informal way for ages now. However, if Flipkart is entering this marketplace, it needs to be very careful about the promise versus the delivery. If they are able to build trust, they can enjoy success. Else, the business will collapse.”

Talking about what went wrong with eBay, Ashish Tiwari, Head- Digital Marketing, Hero Motors Company, said, “Hyper growth market requires investment and focus, which eBay lost somewhere on the way. For Flipkart, it did not make sense to continue with the investment required to keep it alive. It was eminent that Flipkart was only waiting for users to migrate from eBay to its own platform before they called it quits.” About Flipkart’s plan to enter the refurbished market, Tiwari said, “Indians have a tendency to buy fresh goods and it would take an attitudinal shift before refurbished items become acceptable.”