eBay Sees Huge Potential in Emerging Markets, Part 1
By Kenneth Corbin
As eBay surveys the global marketplace and advances its strategy to expand into emerging countries, the ecommerce giant has identified China and Russia as the two markets it is working most aggressively to open for sellers operating in the United States and other regions where the platform is already well established.
Talk of corporate expansion into the emerging markets with huge populations and a growing middle class with more disposable income often revolves around the so-called BRIC countries: Brazil, Russia, India and China.
But in eBay's case, that acronym paves over important distinctions in the company's operations and future plans in each country.
"In terms of our priorities, I think Russia and China are our number one priorities. India's already operating. Brazil's an interesting question," Steve Milton, director of global communications for eBay International, said by phone from his office in Bern, Switzerland. "Anyone who looks for a BRIC strategy - and that's what we're doing - is not going to ignore any of these markets."
Last year, eBay's international business accounted for 61 percent of the company's gross merchandise volume, excluding autos, and 52 percent of net revenues. And almost 60% of fourth quarter 2012 Marketplaces revenue came from international marketplaces, eBay revealed last week.
Milton described eBay's operation in India as "a going concern," by far the most mature of any of the BRIC countries and one that resembles a "very traditional eBay business."
eBay launched its Indian marketplace in March 2005, and maintains offices in Mumbai and Delhi, as well as a PayPal development center in Chennai, with another planned to open this year in Bangalore. Deepra Thomas, a spokeswoman for eBay India, declined to provide an exact number of employees in the country, though she confirmed that the eBay offices and PayPal development center have a combined labor force of more than 2,000 workers. Hundreds more positions are expected to become available once the Bangalore facility opens.
Thomas said that eBay India counts 4 million registered users and some 30,000 sellers.
In China, eBay facilitates a thriving, multi-billion-dollar marketplace through which Chinese sellers export goods to foreign buyers. eBay declined to provide precise numbers on its Chinese operation, though Milton confirmed that the company hosts more than 3,800 sellers in greater China (comprised of China, Hong Kong and Taiwan) who achieved sales of more than $100,000 from June 2011 through June 2012. When added to the number of non-eBay sellers who use PayPal, the company served more than 7,500 merchants with annual proceeds of more than $100,000 in the same period.
But while the Chinese export business has been brisk, eBay has been slower in its progress in opening the import market for outside sellers. In November 2012, eBay took a major step into the Chinese import market with the announcement of a partnership with Xiu.com, a domestic online retailer focused on the fashion and luxury vertical that will serve as the conduit for Top-Rated Sellers to reach Chinese buyers.
Milton explained that the partnership with Xiu.com will address many of the logistical barriers to entry into the Chinese market, including shipping, language translation and currency conversion. For sellers in the United States, Xiu.com will operate behind the scenes, curating and translating eBay.com listings of as many as 5,000 fashion brands to display for Chinese consumers, in their native language.
Once an order bound for China is placed, sellers will ship to a domestic warehouse where Xiu.com will then move the merchandise into China and deliver it to the buyer, assuming responsibility for returns and other customer service support.
Xiu.com is also playing a role in processing payments, giving eBay shoppers in that country the option to pay through multiple providers, including the popular Alipay, while sellers will still be able to receive funds through their PayPal accounts.
"We believe that's a tremendously powerful opportunity," Milton said.
By focusing on the fashion vertical, eBay is seeking to meet the demand of what Milton described as an increasingly sophisticated consumer base with an appetite for Western brands that are either priced steeply or unavailable altogether in the Chinese market.
"I think we've identified a really nice consumer segment," he said. "We know there is a growing middle-class consumer in China who's very interested in fashion. So I think we've hit a number of sweet spots."
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About the author:
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.
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