eBay Japan marketing: A detailed analysis
Task: Provide a detailed report on eBay Japan marketing.
This report focuses on the eBay Japan marketing strategy and factors which led to the company experiencing major difficulties in the Japanese market. The increasing use of the internet through powerful handheld gadgets has brought a commendable change in the field of global corporate business by ushering in the age of eCommerce. The advanced IT Technologies make it possible for businesses and professionals to access the global market but attempting to enter eCommerce individually will result in the businesses incurring huge costs. By using platforms like eBay, small-scale traders could access these high-end technologies allowing them to access global customer markets at minimal investment.
While eBay has successfully entered the Japanese market, it has faced many setbacks. This was the reason eBay Japan marketing strategy initially entered into a joint venture with NEC Corporation, which would help overcome the obstacles. Attempts to enter into collaboration with NEC Corporation had failed over three years as eBay had not considered the fact that the online auction market in Japan already had large well-established players. The significant share of the market was being dominated by Yahoo! Japan and later the Rakuten Auctions Company emerged as a significant competitor of Yahoo! Japan. The fierce competition between them had crumpled the Japanese market entry opportunities for eBay.
The selection of local managers from a country manager plays a crucial role in the fate of that intends to expand its operations to foreign markets. The initial eBay Japan marketing strategy had failed considering this point and had not appointed a local manager resulting in the company facing a backlash from consumers in the market. eBay had also made significant announcements relating to its plan to enter the local market of Japan which allowed the existing competitors to be more vigilant and instigate them to adopt fierce market retentions strategies against the new entrant. No company was ready to split their market share with a new entrant and having been established; they were willing to compromise on profits to retain consumer confidence. This was the exact opposite of what eBay anticipated as they would need to develop the brand's reputation as fast as possible and begin generating income and profits to remain sustainable in the market. With well-established competitors slashing their profit margins, eBay was as good as doomed from the first day.
Core marketing Strategies of eBay Japan
1. Collaboration with NEC Corporation to pass in the Japanese market
The move to collaborate with the local joint venture was deemed to be the most feasible strategy for a foreign entrant. After the initial hurdles, eBay also adopted a similar approach to form eBay Japan by acquiring a localised corporation from the Japanese market. Through the merger with NEC Corporation, the company has increased its magnitude of possibilities.
With the local exposure provided by the NEC Corporation, eBay Japan was able to enter in a contract with Biglobe, which was at the time the largest internet service provider in Japan. This move would be classified as a breakthrough for the company’s business in Japan helping build “Mr Okwara”, eBay’s CEO confidence towards introducing the online auctioning to the Japanese people.
Though the company had made a breakthrough, eBay failed to study Japanese cultural backgrounds which differs significantly from that of consumers in the US A and western European countries. In Japan, malls and supermarkets do not serve as mere product outlets, and local consumers expect pleasant surroundings where they can indulge in recreation and socialising. Japanese consumer buying habits are also very different, and they prefer hand on shopping where they can touch and feel the product rather than just ordering them online. Japanese customers are not impressed without the availability of product samples which is a major hurdle eCommerce outlets face in the Japanese market. This particular strategy is successful in the US A and the western countries. Misinterpreting the Japanese culture with the European culture was a big blunder made by eBay Japan. However, this factor was just one example of the many challenges the company encountered while marketing in Japan.
eBay was also late in entering the Japanese market, and Yahoo Auctions had already acquired a significant share of the e-marketing. Yahoo! had entered the Japanese market at the time when the internet was the latest trend among the youth. Thus, the same strategy of collaborating with the local joint venture had proven to be a success for Yahoo Auctions. The company had worked with Softbank in 1996, to mark its entry in the Japanese market. By the time eBay Japan marketing was declared, Yahoo Auctions had already built a large portal dedicated to the online auction of their products. The company had by then established itself as a very reliable brand which is an essential factor considering Japanese people are highly faithful towards their preferred brand and service providers.
Another significant backlash experienced as a result of the eBay Japan marketing strategy during its introduction phase of their portal is that Japanese customers are very peculiar and strict regarding the quality parameters and not willing compromise on quality aspects. The company’s management had failed to anticipate this, which landed a heavy blow on eBay Japan marketing strategies.
2. Collaboration with Yahoo! To improve the eBay Japan marketing plan
After the initial setback in the Japanese market, the company had decided to attempt merging with Yahoo Japan. eBay had an overall of 83 million registered users in its sites globally as compared to just 6.6 million users in Yahoo Japan, but yahoo Japan was dominant in the Japanese market. Similarly, Japan Yahoo lacked access to North American customers. The collaboration between these companies would have benefited both of them. Both of the countries had launched integrated portals which enabled the American customers on eBay to buy auctioned products in Yahoo Japan and similarly Yahoo Japan users to purchase the products on eBay US. Thus, the generation of a single online marketplace would revitalise the cross-border trading through online auction marketing.
This collaboration was made possible by the Japanese language website sekaimon.com. This website handled the whole process behind assisting the Yahoo Japan users in accessing the products in eBay US.
Similar to the above case, an English language bidding system was urgent for eBay users to access the product's auction in Yahoo Japan. To counter this challenge, the company had introduced the products which came under the category of Japanese licensed character goods.
The denominations of local currencies were assigned to each product auctioned in the integrated portal. The move had encouraged a lot of US customers to buy the products auctioned in Yahoo Japan since they preferred to trade in US Dollars.
Some customised features were also introduced in the integrated portal, which enabled the users to track the shipping status, payment status, and stage of customs clearance.
What is some late entry Setbacks the eBay Japan marketing plan faced?
1. Inability to attract viable customers
As discussed earlier in this eBay Japan marketing report, Yahoo Auctions had already acquired the majority of the market share of Japan when eBay had decided to mark its entry to the Japanese market. With other players already well-established in the Japanese online auction market of Japan, eBay had lost the opportunity garner a vast customer base in Japan.
Though online shopping is not the preferred mode of shopping among the Japanese population, the eBay Japan marketing plan could have attracted a sizable population’s interest if they had entered the market earlier. This move was tough for all companies due to the Japanese population negative perception towards online shopping.
Being the late entrant into the online auction market of Japan, the company had to bear additional pressure towards appealing and convincing the remaining customers whose buying habits were more conventional. Yahoo Japan early entry in September 1999 had allowed the company to tap into a large portion of customer who were not apprehensive regarding online shopping.
2. Inability to attract the customers garnered by Yahoo! Japan
Another setback the company had to face in the later stage was to gain the attention, attract and retain existing Yahoo! Japan customers. This effort was sabotaged by the high loyalty of the Yahoo! Japan customers.
In 1999, the internet was deemed to be a fad amongst the youth of Japan and Yahoo had gained the reputation of a reliable brand by providing the services of a Search engine, Email, Social media platform, etc. The brand of Yahoo! was widespread among the Japanese community, which was categorised as a much larger one as compared to eBay, which provided only the online auction services.
3. High contrast in the services provided by both of the companies
When the services of eBay had launched in Japan, it was compared with the already established services offered by Yahoo!. Customers have observed a significant disparity in the brand value, service charges, quality, billing, etc. of both the companies.
The primary deciding factor was the transaction charges levied by the eBay services. At the same time, Yahoo! Japan was delivering the products with absolutely no transaction charges. The services of Yahoo! Japan appeared to be a cost-effective option for Japanese customers when compared to that of eBay. The management had realised the magnitude of the initial eBay Japan marketing plan blunder when the customer base had increased significantly after the removal of transaction charges.
What Cultural aspects did the eBay Japan marketing plan overlook?
Culture analysis is a fundamental requirement for companies to perform while evaluating new markets and before developing any market entry strategy. It is vital to make sure the target markets and consumer’s needs and cultural backgrounds are first understood after which the business can develop suitable strategies. This was an aspect overlooked while developing the initial eBay Japan marketing and expansion plans which led the business to face difficulties in the market; this is especially true while considering expanding operations to Asian markets due to the close religious and cultural ties. While eBay may have experienced difficulties, there are success stories, but each has had to make radical changed to their existing strategies to win consumer confidence. A perfect example of a brand that performed in-depth research and made a significant modification to its current plan is McDonald’s entry to India. McDonald's traditionally serves beef burgers and French fries, but with the Indian market offering exposure to over 1.2 billion people, McDonald would need to make radical changes to their marketing strategies as well as menus. Similar to Japan, Indian communities have strict ties to their culture and religion, which made it impossible for McDonald's to consider using beef products. In addition to the Hindu religious limitations to beef, McDonald's would also need to contend to a majority of vegetarians as well as a sizeable Islamic community in India who would not consume non-veg products. This resulted in McDonald's revamping their marketing strategy and overhauling its menu and ingredients to meet Indian market consumer needs. Similarly, the eBay Japan marketing plan strategists needed to review the Japanese consumer needs and expectations based on which the brand would be able to develop a more active market entry strategy.
1. Failed to interpret the mind-set of Japanese culture
The eBay Japan marketing plan had failed to understand the Japanese people’s culture and mindset, which resulted in the brand failing to wind the Japanese consumer’s confidence. Firstly Japanese consumers are highly dedicated to their preferred brand. This makes it very difficult to convince Japanese consumers to leave a brand they are satisfied with for a new one. Another primary flow linked to eBay Japan’s strategy was lack of proper quality control management. Japanese consumers are intense towards acquiring high-quality products, and any relaxation will lose consumer confidence. Without an appropriate quality control management mechanism, eBay would soon begin developing a bad reputation among Japanese consumers. In addition to the above, Japanese consumers also prefer a hand on experience while shopping making online shopping a second preference.
2. Failing to employ an appropriate person
As mentioned earlier, most Asian countries have strong ties with their culture, religion and communities and most feel more comfortable while being served by one of their own. This makes hiring professionals and staff from the local community vital to help enhance a link between the brand and the customers. In addition to this, having staff and managers from the local communities allows for better communication. The eBay Japan marketing plan had also overlooked the benefits of Hiring managers and staff from the local community nor recognized the benefits. This would have helped build a closer relationship with customers, thus helps win consumer confidence and increases retention.
3. Unplanned and Impulsive approach towards the Japanese Culture
Without proper research conducted before developing an eBay Japan marketing plan relating to the Japanese culture and ways of life, eBay soon found itself unprepared to cater and address Japanese consumer expectations. This was a result if lack of cultural research as well as failing to hire Japanese managers who could have helped the brand reorients their operation and aligns to the Japanese consumer expectations.
Present Status of eBay
After experiencing severe market entry limitations and hurdles due to the initial eBay Japan marketing plan, eBay Japan has partnered with Yahoo! Japan, which has allowed the companies to widen their market share and reach. The collaboration has helped both companies tap the market they had faced difficulty with. eBay has increased its market exposure by accessing Japanese consumers while yahoo has expanded its customer base in the USA and Europe. This has helped both companies reach out to a significant larger number of customers which has benefited both eBay and yahoo
Every company needs to undertake in-depth research relating to new markets while analysing the consumer cultural and religious limitations and expectations before entering into any market. Failing to perform detailed market and cultural analysis will result in developing ineffective market entry strategies which will ultimately result in losing consumer interest resulting in losses for a brand. Each consumer market is unique, making it essential to first perform the market and consumer analysis based on which a feasibility study can be developed while incorporating consumer expectations and the brand's ability to deliver on those parameters. The eBay Japan marketing strategy had overlooked the above factors resulting in eBay facing major difficulties establishing its operations in Japan