eBay Sees Huge Potential in Emerging Markets, Part 2
By Kenneth Corbin
Partnerships like the one that eBay struck with Xiu.com offer the company deeper inroads into booming overseas consumer markets. In countries where eBay doesn't have an established operation, it offers a version of the marketplace through its Global Buying Hub, translated into a limited number of languages, with delivery handled through its global shipping platform, an often cumbersome process that is prone to long delays and erratic delivery schedules - exactly what eBay is trying to avoid with the Xiu.com partnership.
"Getting the buyer experience right - that's really what we're focusing on," Milton said. "It's easy for them and it's frictionless for the seller as well."
In addition to the language constraints, overseas consumers shopping on the Global Buying Hub only see a limited set of listings. The program matches a shopper's IP address to display only listings from sellers who offer shipping to their country. Because the program is location-targeted, users attempting to access the Global Buying Hub from a U.S. IP address will be redirected to eBay.com.
Down the road, eBay could forge additional partnerships with Chinese firms to expand the import market, potentially targeting other verticals while it builds toward the 5,000 fashion brands it has set as a tentative quota for the Xiu.com partnership.
"I don't know whether it's going to rival the export business, because that is huge," Milton said. "It's baby steps - test and learn. Where it ends up, who knows."
In Russia, eBay's path forward is less clear. Milton described the ecommerce market in that country as extremely fragmented, with eBay standing as the largest player but with a market share of just around 3 percent to 4 percent.
Russia is home to a rapidly growing segment of online shoppers. In that regard, the country presents a similar opportunity to the Chinese market, but to date, eBay's Russian site, which dates to 2010, only offers a platform for overseas sellers to ship goods into the domestic marketplace, unlike the well-developed export business eBay runs in China.
"eBay in Russia is import only - there are no Russia sellers exporting," Milton said. "Like China, they're a fast growing, connected group of consumers who are online."
The Russian postal service, which reportedly is headed for a major overhaul in 2013, has posed a particular challenge to eBay's vision of a smooth buying experience where buyers can rely on predictable delivery windows.
But eBay is also mulling its options for a more comprehensive approach to building its business in Russia. That could involve a partnership with a domestic ecommerce outfit similar to the deal with Xiu.com, though Milton said that eBay is likely to remain more involved in the logistical processes in the Russian market.
"It's hard to say because we're still working through what that model looks like. In Russia, the approach might be slightly different," he said. "Russia is one where we'll have a higher-touch approach. ... Russia is one that we'll intermediate for. How we'll do that, I don't know."
In terms of its near-term priorities in overseas markets, eBay is chiefly focused on expanding in China and Russia, and Milton suggested that a "steady stream of news and developments" concerning the company's operations in those markets could be expected in 2013.
That's not to say that eBay is ignoring Brazil, another fast-growing market that has been attracting considerable attention from U.S. companies. But Brazil still lacks a dedicated eBay site, and the company declined to share plans for launching one. In the meantime, PayPal maintains a permanent office in the country, but there are no eBay Marketplace employees based there.
Through its investment in MercadoLibre (or MercadoLivre, in Brazil), eBay has a stake in the Latin American market, but Milton explained that that arrangement is "simply a financial investment," rather than an operational partnership, "like the old-fashioned deal with Craigslist."
At the bottom right corner of eBay's home page, where a flag icon labeled "eBay Sites" expands to display the company's overseas operations, the three Latin American countries listed - Argentina, Brazil and Mexico - all link to MercadoLibre sites.
But if Brazil is farther ahead on the global roadmap, when eBay does turn its attention there, it will face many of the same challenges it is dealing with in China and Russia - translation, shipping, payment processing and customer service, among others. In each of the emerging markets where eBay is expanding, the company's work on those fronts comes in service of developing a cohesive, user-friendly buying experience, while at once expanding sales opportunities for sellers in the United States and other established markets.
"It's opening up new markets for our existing sellers. I guess I would call that accelerating cross-border trade," Milton said. "There are inherent barriers for (foreign consumers) to be shopping on eBay.com, and we believe if we can remove some of those barriers, some of those pain points, we can open those markets."
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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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