Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon June 1 2015 21:18:46

How eBay Could Have Owned China

By: Ina Steiner

Sponsored Link

PayPal was almost one of eBay's biggest missed opportunities before eBay finally acquired it in 2002 - a new book reveals that it was China's Alibaba that won that distinction. 

eBay began courting Alibaba in 2004, according to Porter Erisman, who was a Vice President at Alibaba from 2000 to 2008. In his new book, "Alibaba's World," he reveals that eBay CEO Meg Whitman was stunned to learn a year later that Alibaba chose to enter into a deal with Yahoo.

"eBay had likely assumed it was Alibaba's only suitor and its executives could take their time," Erisman wrote in his book. Meg Whitman made a desperate but futile attempt to reach Masayoshi Son, the CEO of Alibaba investor Softbank, when she heard the news.

To understand just what a missed opportunity that was, the tables are now turned: Alibaba is considered by many to be a candidate to buy eBay.

At the time, however, Alibaba was a wholesale marketplace that brought together retailers and manufacturers (B2C). In 2003 when its charismatic CEO Jack Ma saw eBay beginning to enter China, he decided to go to war with eBay. He did so by launching a person-to-person marketplace in China called TaoBao that was similar to eBay.

Alibaba was a good fit with eBay, whose merchants used the Chinese platform for product-sourcing. Why battle eBay in China? Ma believed that while eBay would start with consumers in China through its acquisition of Eachnet, over time they would start going after Alibaba's wholesalers. 

He succeeded - TaoBao was a thorn in eBay's side in China. Yet eBay was confident it could win there. "Whoever wins in China wins the world," Whitman famously said.

Erisman told EcommerceBytes that there were multiple discussions and offers by eBay over more than a year's time, beginning in 2004. "Each time, the offer got higher," he said. And had eBay given a generous enough offer early on, there's a good chance that Alibaba would have accepted it, Erisman revealed. 

But would Chinese government regulators have approved the deal? Erisman said the deal would have received smoother acceptance by the Chinese government than Alibaba's ultimate deal with Yahoo, since eBay was a pure ecommerce company and involved in less sensitive areas of the Internet than Yahoo.

"In hindsight, it would have been the smartest move that eBay ever made as Alibaba (just like PayPal) would have gone on to outgrow eBay," he said. "It would have been great for eBay sellers because it would have brought them closer together with Alibaba's wholesale sellers."

But ultimately, Erisman said, such a deal would probably have been worse for Alibaba and entrepreneurs. "Yahoo proved so different than Alibaba that Alibaba was able to make a clean break and grow independently. But Alibaba and eBay are so similar that I have a feeling eBay's management would have stifled Alibaba's growth, putting their own management in place, in the same way they did with Eachnet."

Alibaba Group Holdings went public in the fall of 2014, with the Wall Street Journal calling it one of the most valuable technology enterprises in the world.

What would eBay be like now if it had acquired Alibaba in 2004 or 2005? Would Carl Icahn have been able to pressure it to break up the company?

(Read more about Erisman's book and some of the stories within in Tuesday's EcommerceBytes Newsflash.)




Comments (44) | Leave Comment | Permalink

Readers Comments

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: The End

Mon Jun 1 21:32:31 2015

Ebay is sick and demented.
It should be totally focused on AMERICANS and their success in AMERICA.
The health and welfare of AMERICANS is first and foremost on the agenda of the healthy, fit AMERICAN business.
Not raping the profit from the sellers should be the prime concern.
2% take rate FVF NOT including their shipping fee. .50 to list for 7 days.
If that isn't enough free money for Ebay then Ebay should not exist.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: Frank Abagnale This user has validated their user name.

Mon Jun 1 21:51:47 2015

I guess Ebay won't be winning the world.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: Philip Cohen
Web Site

Mon Jun 1 22:02:21 2015

Did not the eBay turkey also pay considerably more than they originally could have for PayPal for similar reasons ...

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid … http://bit.ly/11F2eas  

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: pace306 This user has validated their user name.

Mon Jun 1 23:54:56 2015

eBay for YEARS now continues to make one wrong move after another.

If they would ONLY get someone who knows ecommerce to run the company instead of moron, eBay might be "Amazon".

Well, the mistakes seem to continue under Wenig - I dont covet the IMPOSSIBLE task of turning eBay around. They have burnt too many bridges - with sellers, with buyers, in ecommerce, with large retailers and with manufacturers .... so eBay - who's left to come and ave you NOW?

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: toolguy

Tue Jun 2 00:52:44 2015

I don't sell or buy on Alibaba

I don't sell chinese merchandise

eBay works for me and works well

I'm sorry other sellers here aren't as happy with eBay as I am.

Maybe some sellers should reconsider what they are selling on eBay.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: Deltamaster This user has validated their user name.

Tue Jun 2 00:54:44 2015

''I guess Ebay won't be winning the world. ''

Awe, that is really too bad.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: RKTOYS

Tue Jun 2 01:45:14 2015

@pace306

eBay is just another business where management is so afraid of their own incompetence that it selects for inferiority to keep that fear in check.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: sasikat9 This user has validated their user name.

Tue Jun 2 05:46:07 2015

Wait about two more years when Ebay is on its last breathe...alibaba will then step in and scoop them up.

It will take alibaba about a new york second to rid the world of Ebay. One fell swoop and poof Ebay will not exist anywhere but just a memory of a slimy, greedy, arrogant U S company who thought they knew it all.

People get giddy with the thought.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: Chicago48 This user has validated their user name.

Tue Jun 2 06:30:15 2015

I know one thing.  If you search for almost any clothing or accessory, Alibaba (aliexpress) is going to show up in the search more times than Ebay.
The problem I have with Alibaba is trying to contact Chinese/Asian manufacturers to either buy their goods or get more information.  The responses I got were in poor English and couldn't understand.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: Chicago48 This user has validated their user name.

Tue Jun 2 06:32:01 2015

Just look at EBay's acquisition of Half.com and Ebayclassifieds.  Do you think those sites are any help to their revenues?  Probably not. Another waste of money and they haven't updated or changed the sites since they bought them.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: hopeforthebest This user has validated their user name.

Tue Jun 2 06:48:30 2015

Their English is just fine - until you have a complaint. Then they no longer speak English at all and can't find anyone who does.

Everybody is way too worried about these guys. The site is useless and nearly impossible to buy from.

It's nothing but an endless list of sellers, the price on the ads are often totally made up, and they hardly bother to get back with you at all.




Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: Rexford

Tue Jun 2 07:15:18 2015

Instead, China will own eBay.  The post from Ina and David yesterday regarding favored Chinese placement in search appear to be Johnny D's putting some knock-off Chinese lipstick on the eBay pig for an impending sale.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: ignatz This user has validated their user name.

Tue Jun 2 07:31:51 2015

Certainly, ebay's incompetence contributed to its poor performance in China.
But never forget - no company in China does well without the Chinese government's "blessing."  And you can be sure that the Chinese government extends its "blessing" to Chinese companies over American companies every day of the week.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: Mark4 This user has validated their user name.

Tue Jun 2 08:41:43 2015

won't be long now before Alibaba owns ebay. Thank you John Donahue.

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: ajeweler This user has validated their user name.

Tue Jun 2 08:54:54 2015

alibay soon your way.....
and alipay will be the newest....
cannot stand either company the greed is unreal!!!!!

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: pace306 This user has validated their user name.

Tue Jun 2 09:10:04 2015

ANY of the other ecommerce sites that exist today could have bought/merged with eBay, yet not ONE will touch it with a 10 foot pole.

When Rakuten was looking for a partner - they COULD have taken eBay. Softbank has that kind of money and could have merged with them easily. Just seperate auctions from BIN and done.

Sears could have too. Instead of hiring all kinds of people to try and bring its cranky ecommerce site into the 21rst century, all they had to do is integrate with eBay. BIN listings would be FILLED with Kenmore and Kmart brands. But no they bailed too.

Those are just examples of SMART moves eBay could have done, but didnt.

Paypal? It was easier to just buy the technology as apposed to creating it themselves, and NO ONE (bank) would have/will take eBay seriously. Besides, eBay needs a "bad cop" to do its dirty work aka steal from sellers.

Amazon started HERE first, then branched out, eBay wants to do the opposite - care about China then worry about US sales - which are flat lining at BEST.

eBays GIS aquisitions make TONS on money for eBay - our 20 cent listing fees dont hardly keep eBay alive, they barely pay for the fuel for the Lear jet JD leases under eBays name.

As Ive said a few times - eBay has been MIA at CES for some time now. Its the worlds most important show and EVERYBODY is there, everyone.

The 2015 International CES reached a record 176,676 industry professionals with 48,833 coming from outside of the U.S. The 2015 CES also set a number of other records, including more than 3,600 exhibitors, more than 2.23 million net square feet of exhibit space, 6,952 media and analyst attendees, 703,602 mentions of #CES2015 during the show with 7.51 billion total potential Twitter impressions, and 153 countries represented.

All that and where was eBay? NO WHERE!

Im not sure what Wenig does all day, but he better do more of it and SOON, before eBay becomes totally irrelevant.  

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: toolguy

Tue Jun 2 09:58:29 2015

eBay's been going "Out of Business" on this site for 10 years.

eBay isn't going to be bought out and the eBay ship will continue to sail the seas.

I have way too many more fish to catch in the eBay ocean of buyers!

I call eBay buyers fish because if you run a auction you never know how big the last bid will be.

I've been a full time seller for 16 years, 100% of my income comes form eBay.

The fun never stops ~ LOL

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: Philip Cohen
Web Site

Tue Jun 2 10:19:23 2015

@RKTOYS,

You've got it spot on; eBay's executive suite is the "Peter Principle" personified ...

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid … http://bit.ly/11F2eas

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

This user has validated their user name. by: Philip Cohen
Web Site

Tue Jun 2 10:32:57 2015

And another reminder ...

Notwithstanding that the eBay Dept of Spin proclaimed a “400% increase” in eBay’s stock price, from its low of ~$10 in March 2009, during the 2008–2012 global recession, to ~$50 (in September 2012), the fact is, in August 2007, immediately prior to the beginning of the GFC, when the "Pain From Bain"—John Joseph Donahoe II (aka Johnny Ho)—now into the eighth (and final) year of his planned “three-year turnaround” of eBay—was already effectively in control of eBay, the share prices of both eBay and Amazon were ~$40. With great effort eBay has recently managed to reach a high of $63 but Amazon is currently $430. What does this tell us? Clearly, that the “smart money” on Wall Street recognises eBay Inc. to be a "dog", and Johnny Ho to be a very poor dog handler.

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid … http://bit.ly/11F2eas  

Perminate Link for How eBay Could Have Owned China   How eBay Could Have Owned China

by: gizmo This user has validated their user name.

Tue Jun 2 11:05:42 2015

There was a day , you could find , or sell anything on ebay. Now , you cant sell anything. ding! ding!
Oh , then there is toolguy.

Click to view more comments
1 2 3  [Next Page]


Login is required to post comments.
To sign in to leave a comment using your AB Verify User Name, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.