|Fri Sept 10 2010 10:55:18|
What Sellers Get from eBay's Cooperation with Alibaba
By: Ina Steiner
eBay tried to turn a new page in its history with China today when CEO John Donahoe made a conciliatory keynote address at Alibaba's Alifest conference. Longtime readers will remember how contentious eBay's battle was with Alibaba. Washington Post columnist Leslie Walker blogged about it in this 2006 post when it was clear then-CEO Meg Whitman put her wounded ego before her sellers' interests.
Forbes said Donahoe's presence at Alifest was almost like Napoleon's top lieutenant returning to Waterloo to speak at the invitation of the British Empire. So why swallow his pride and speak at a conference that his predecessor refused to attend?
Donahoe sees the opportunity not as one of opening China's market to its longtime U.S. sellers, but rather, providing Chinese sellers with global opportunities. What's in it for eBay? The potential for PayPal growth.
Alibaba has allowed PayPal onto AliExpress, its U.S. marketplace where sellers can source product from China. But while PayPal may be a facilitator for Chinese exports, it's unlikely Alibaba will willingly allow PayPal to compete with its own AliPay service in domestic China.
Alibaba clearly has the upper hand in this relationship. Through its acquisition of eBay's U.S. partners Auctiva and Vendio, Alibaba gains 250,000 eBay sellers that drive over $7 billion in GMV annually, and are responsible for an estimated 5 - 10 percent of eBay's listings.
Alibaba's David Wei told the Wall Street Journal he wants eBay to help it build an online model that would enable Alibaba's customers to sell to eBay merchants for resale to consumers. eBay sellers are familiar with the challenges of competing with low-priced goods from China - visit the Wholesale category in eBay's Pottery and Glass category to understand users' concerns with reproductions on eBay.
Global trade can be good for small entrepreneurs, but carries an abundance of challenges as well. Unfortunately eBay is too focused on growing PayPal to concern itself with the challenges facing its marketplace buyers and sellers.