The Death of eBay Japan

Yahoo Japan's auction site was the lucky winner in gaining a foothold in the Asian power house. By mid 2001, BusinessWeek magazine said that Yahoo had 95% of the online-auction market in Japan while eBay Japan had only a 3% share.

By early 2002, eBay USA, the home of the online auction behemoth, had decided to pull out of Japan, and opted to buy Taiwanese auction website NeoCom Technology, for more than $9.5 million.

If It Doesn't Work the First Time, Try Again (Somewhere Else)

eBay executives said the purchase of NeoCom would give it access to Taiwan's 6.5 million internet users and give NeoCom's existing users an enhanced website and broader selection of goods. NeoCom has been operating since 1998, and operates two  auction websites, uBid.com.tw and Bid.com.tw.

eBay's failure in Japan was three-fold. Firstly eBay joined the market five months after Yahoo auctions, giving its competitor a massive head start to establish itself. Secondly, eBay failed to understand the Japanese buying psyche. They tried to target the younger market, and forced them to pay by credit card, but didn't realize that most young Japanese prefer to pay "cash on delivery" or by bank deposit. The final nail in the coffin was imposing a commission charge of up to 5% - where its competitor Yahoo charges nothing at all. Clearly fatal and basic flaws in their business plan.

When eBay finally closed its doors, and its auction website, it left 17 employees out of work and 25,000 listings unsold. A heavy loss of face for the online auction website. Although eBay claims it wants to re-enter the Japanese market sometime in the future, it would have to really think hard about doing it right next time. Japan is unlikely to accept eBay with open arms second time around.

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