Taobao.com, the “eBay of China” is preparing a big push overseas, China Daily reports. Right now, this involves letting Chinese buyers on its platform buy overseas from sellers in America and Europe.It’s hard to believe this isn’t just a first step. Taobao, owned by Alibaba.com, founded by colourful entrepreneur Jack Ma, has trounced eBay in China, where it had made a big push and boasted that it would own the market. Now that Taobao is solidly in place, it’s time for expansion. Western internet companies haven’t been successful in China, but can China companies be successful in the West?
Taobao is an online marketplace. This means it’s a two-sided market — you need both buyers and sellers — and two-sided markets are very to create. But once they’re created, they’re very profitable and nearly impossible to displace because they have such strong network effects. This is why eBay is still a cash machine even though its product and management have been floundering for years.
Buyers will go where sellers are, and sellers where buyers are, but sellers are more important at first — like women are more important than men if you’re starting a dating site. So Taobao’s move here is very strategically canny: it’s using its huge base of Chinese buyers to peel off a few US and European sellers away from the likes of eBay, Etsy and PriceMinister (European marketplace leader, recently acquired by Japanese juggernaut Rakuten, which is on a similar global expansion warpath). Once Taobao has enough US and European sellers it can start attracting buyers in a meaningful way, and it’ll have a serious shot at unseating eBay on its home turf.
With its sleeping giant, the online auction market is ripe for disruption. Should be interesting to watch.