How Jack Ma took on eBay with Taobao(techinasia.com)
techinasia.com
How Jack Ma took on eBay with Taobao
https://www.techinasia.com/were-war-story-jack-ma-ebay-taobao
74 comments
I'm not sure that 'copycat' is entirely fair. Google wasn't the first search engine, Facebook wasn't the first social network, Amazon wasn't the first online retailer. Flipkart or Taobao have some similarities to certain western retail platforms, but are profoundly different in many important ways.
WeChat might have had the advantage of the Great Firewall, but they have also built a genuinely innovative platform that is better suited to the Chinese market and in many respects much more sophisticated than any Western equivalent. No western company would have grasped the importance of hongbao or implemented it so skilfully. No western company could have anticipated the hugely positive reaction to WeChat Moments advertising and the remarkably high CPM.
I think there's a certain "not invented here" attitude prevalent in Silicon Valley. We do iteration, they do copycats. We build a better mousetrap, they make shitty knock-offs.
WeChat might have had the advantage of the Great Firewall, but they have also built a genuinely innovative platform that is better suited to the Chinese market and in many respects much more sophisticated than any Western equivalent. No western company would have grasped the importance of hongbao or implemented it so skilfully. No western company could have anticipated the hugely positive reaction to WeChat Moments advertising and the remarkably high CPM.
I think there's a certain "not invented here" attitude prevalent in Silicon Valley. We do iteration, they do copycats. We build a better mousetrap, they make shitty knock-offs.
Look at Walmart's disastrous attempts at expansion in Germany, for instance.
I think people are being lazy. Of course it is harder to operate in China than in e.g. Europe were US companies were able to avoid local regulation, make sweet heart deals to pay a lot less tax and engage in anti-competitive behavior. Still essentially all mayor tech companies, except Google and Facebook, are there.
The large reason for Chinas success is that for every segment that FAANG casts its shadow in the west there is at least half a dozen companies in China. Europe doesn't lack e.g. map providers that even today could compete with Google if it wasn't for the Google's dominance in the overall market.
Taobao is also a lot better than eBay. (And I don't see that in itself being a factor of anti-competitive behavior like in some other cases).
The large reason for Chinas success is that for every segment that FAANG casts its shadow in the west there is at least half a dozen companies in China. Europe doesn't lack e.g. map providers that even today could compete with Google if it wasn't for the Google's dominance in the overall market.
Taobao is also a lot better than eBay. (And I don't see that in itself being a factor of anti-competitive behavior like in some other cases).
Competing against eBay is like saying you're competing in a 100m race against someone in a wheelchair. eBay has done nothing to make itself better in the last 15 years. New "features" routinely fail, and their APIs are a graveyard of dropped ideas. I hope Taobao expands to the US, eBay needs real competition, anyone working there should be embarrassed for themselves, more importantly the Directors and above.
When I was interning at eBay a few years ago, they were doing some amazing work. I worked with the machine translation team and they were doing cutting edge research all over the place with new patents being awarded regularly (even to interns!). Many of their algorithms like spelling correction were significantly better than the state of the art, in part due to their unique data set. They were also actively rebuilding and rewriting critical services to improve reliability and speed, from their computer vision to their speech recognition to their search engine to their seller tools. They split from Paypal and rebuilt and redesigned the app and the website. They started shipping boxes to sellers with the eBay branding to solve the problem of seller's not having shipping material. They started marketing and selling eBay giftcards in numerous stores. They started curated collections of themed finds on eBay (and ML-generated collections). They were reaching out to major brands to sell on eBay as a storefront. They unveiled a really well done AI chat bot to sell eBay items to users.
It's an impressively run shop from a technical perspective at least. I do not think it's fair to eBay or it's current and former employees to say that they've done nothing to make themselves better in the last 15 years.
It's an impressively run shop from a technical perspective at least. I do not think it's fair to eBay or it's current and former employees to say that they've done nothing to make themselves better in the last 15 years.
Many of their algorithms like spelling correction
Also easily disproven by comparing the site then to now.
Clever tech experiments don't make up for hostile UX. I begrudgingly use eBay when I have no other choice, but I don't enjoy the experience one bit. The listings are flooded with obviously counterfeit products, obviously dangerous electrical goods and Chinese sellers who are obviously lying about their location.
The massive fees I pay as a seller offer me no safeguards whatsoever, because the seller protection policies are riddled with loopholes that every scammer knows about. I budget for the fact that I'm going to be defrauded about 5% of the time, in the knowledge that eBay will always side with the fraudster.
You can do all the machine learning curation you like, but it's just frosting on a dog turd. The core experience of buying and selling is utterly miserable. That's the stuff that needs to be fixed.
The massive fees I pay as a seller offer me no safeguards whatsoever, because the seller protection policies are riddled with loopholes that every scammer knows about. I budget for the fact that I'm going to be defrauded about 5% of the time, in the knowledge that eBay will always side with the fraudster.
You can do all the machine learning curation you like, but it's just frosting on a dog turd. The core experience of buying and selling is utterly miserable. That's the stuff that needs to be fixed.
[deleted]
I used eBay to sell a couple of electronics in the last couple months.
It was hands down one of the worst experiences I've ever had with software.
Scammers made dozens of buy it now requests, fake paypal invoices, losing the auction at the last second to a scammer. To top that off, I experienced a bug that didn't allow me to relist my item, and I still haven't been able to sell the item.
I hadn't used eBay in 5 years. I couldn't believe how bad the experience was. If I had money I would short their stock.
It was hands down one of the worst experiences I've ever had with software.
Scammers made dozens of buy it now requests, fake paypal invoices, losing the auction at the last second to a scammer. To top that off, I experienced a bug that didn't allow me to relist my item, and I still haven't been able to sell the item.
I hadn't used eBay in 5 years. I couldn't believe how bad the experience was. If I had money I would short their stock.
I remember after deving a 50 player 3d networked multiplayer game in nodejs, that they became interested in interviewing me ( at the time node was only about 2 years old ). Unfortunately in the 4 hour pre-interview demo they wanted me to code, there was a deprecated call to a function I referenced later. Due to the time constraint I missed that one line of code. App worked flawlessly as I had tested it. Thing is I even knew I had a line of code somewhere that was deprecated but figured 4 hours was enough time to spend on a coding exercise, especially given, well , my 2 year demo project of a multiplayer game.
As you can tell from the tldr; I was politely told they would not be interviewing me.
All because of one trivial line of code, in a 4 hour demo done in my own time.
To be honest, I knew the chap was giving me a chance to correct it by giving me a few days, but I thought it would be in bad faith to do it when I spotted the issue.
Anyway, I didn't sweat it, I walked into a job at good startup, literally with gaffa tape on my sneakers and got it.
They obviously make terrible decisions before even interviewing people in person.
As you can tell from the tldr; I was politely told they would not be interviewing me.
All because of one trivial line of code, in a 4 hour demo done in my own time.
To be honest, I knew the chap was giving me a chance to correct it by giving me a few days, but I thought it would be in bad faith to do it when I spotted the issue.
Anyway, I didn't sweat it, I walked into a job at good startup, literally with gaffa tape on my sneakers and got it.
They obviously make terrible decisions before even interviewing people in person.
It was 99% not because of deprecated method, unless they explicitly told you so. Deprecated code detection is compile/build tools job, not yours.
>I hope Taobao expands to the US, e
If you noticed, Chinese dotcoms are extremely bad at overseas expansion, unless they are the only fish in the pond (original alibaba.com)
I personally know the man who was singlehandedly responsible for 70% of Alibaba's overseas revenue, and he quit the company because after 5 years of hard work, he was not only not promoted, but got his position superseded by a guy "with big business cred". Soon after, their overseas revenue flatlined.
This tells a lot of their culture in the company.
If you noticed, Chinese dotcoms are extremely bad at overseas expansion, unless they are the only fish in the pond (original alibaba.com)
I personally know the man who was singlehandedly responsible for 70% of Alibaba's overseas revenue, and he quit the company because after 5 years of hard work, he was not only not promoted, but got his position superseded by a guy "with big business cred". Soon after, their overseas revenue flatlined.
This tells a lot of their culture in the company.
I think in 2018 eBay has a lot of competition in the US. The bulk of the stuff on eBay are commercial sellers that can also use Amazon. When an average Joe might be selling his stuff, it tends to go on Facebook Marketplace these days, or Craigslist. The only thing they really have going for them is the auction format, but how often does THAT get used, even on eBay?
eBay own the long tail. Facebook Marketplace and Craigslist work fine if you're selling a lawnmower or a handbag, but they're hopeless if you're selling old baseball cards or an amateur radio transceiver or an Eames chair.
I heavily use the auction listings. For specialist tools the Business/Industrial category is near impossible to beat. As a seller there aren't enough people interested in esoteric items to offload locally and as a buyer I never see them available on Craigslist in my area.
With that said, I only buy on Ebay, never sell. Between shipping, fees, and the non-existent seller protection most stuff is better off given away locally or tossed.
With that said, I only buy on Ebay, never sell. Between shipping, fees, and the non-existent seller protection most stuff is better off given away locally or tossed.
Keep in mind that this story happened before taobao was launched in 2003, when eBay was the most dominant e-commerce player.
And yet there it is, far and away the largest and most successful site of its kind in the United States.
That doesn't stop it from being a bad user experience, it just means no one wants to do it better.
Perhaps, but perhaps it is simply suited just fine to its users' needs despite looking dated.
* Goes to war with eBay *
* Yes, hello DNS this is Jack Ma, please nullroute ebay.cn kthx *
* Wins war
* Yes, hello DNS this is Jack Ma, please nullroute ebay.cn kthx *
* Wins war
https://www.google.ca/amp/s/www.forbes.com/sites/china/2010/...
See above for a more full analysis, Chinese govt. could have given preferential treatment but it was Ebay that had adverts all over Chinese buses and had blocked Taobao from advertising on Chinese web platforms through exclusive partnerships.
See above for a more full analysis, Chinese govt. could have given preferential treatment but it was Ebay that had adverts all over Chinese buses and had blocked Taobao from advertising on Chinese web platforms through exclusive partnerships.
> Chinese govt. could have given preferential treatment
How do we know they didn't? They could have just decided "Now that Taobao is up and running, we can get rid of ebay". They've done worse before, so it's not a stretch.
It's interesting that there are no massive web properties in China with the bulk market share (google, facebook, ebay, amazon, twitter, etc) that aren't Chinese owned. Yet, in the entire rest of the world, those same websites are #1. That's not just some coincidence or one-off, that's clearly governmental manipulation and control.
If it was just one or two web properties, I could understand. Like how it is with Yahoo! Japan. But all of them? Sorry, China doesn't want western companies running the show within their country. Articles like this are moot since there was no future with eBay in the #1 spot thanks to the CCP.
How do we know they didn't? They could have just decided "Now that Taobao is up and running, we can get rid of ebay". They've done worse before, so it's not a stretch.
It's interesting that there are no massive web properties in China with the bulk market share (google, facebook, ebay, amazon, twitter, etc) that aren't Chinese owned. Yet, in the entire rest of the world, those same websites are #1. That's not just some coincidence or one-off, that's clearly governmental manipulation and control.
If it was just one or two web properties, I could understand. Like how it is with Yahoo! Japan. But all of them? Sorry, China doesn't want western companies running the show within their country. Articles like this are moot since there was no future with eBay in the #1 spot thanks to the CCP.
Those tech companies are the result of censorship and definitely Chinese preferential treatment and national security, etc.
Chinese preferential treatment by a Chinese govt is normal like the US prefers US companies such as US bailing out Ford and GM because of jobs. China would much prefer chinese companies and workers instead of international because it provides jobs and income.
US companies also dominate in China, see McDonalds or Starbucks or Apple in China. A lot of international companies dominate China, just not all of technology, also Apple is a tech company last time I checked. Even if it was a democratic Chinese govt, whats stopping it from supporting a Chinese company over a US one, whos to say that the democratic govt wont go China for the Chinese like Trump?
US companies also dominate in China, see McDonalds or Starbucks or Apple in China. A lot of international companies dominate China, just not all of technology, also Apple is a tech company last time I checked. Even if it was a democratic Chinese govt, whats stopping it from supporting a Chinese company over a US one, whos to say that the democratic govt wont go China for the Chinese like Trump?
To all the people saying Jack Ma is only winning because of govt intervention: Have any of you guys actually been on ebay in the last 10 years? The surprising thing is not that they got beaten in China, it's that they're still in business anywhere else.
From all these comments, you can tell how naive those commentors are. If you all blame the failure of eBay due to Chinese government, why it would choose Alibaba, not other Chinese companies? Why Alibaba would success and be one of Top 2 in China?
In 2000s, Alibaba is nobody, and eBay is the giant with unlimited fund and great brand. But it still failed due to its vanity.
It's easy to blame Chinese government as it's political correct. But don't forget, Chinese market is also a fully competitive market.
I agree that it's easy to blame the Chinese government in this case, and that there's more to it than that, but just because competition exists in the Chinese economy doesn't mean the government isn't adjusting the scales behind the scenes.
Alibaba not only competes with non-Chinese companies but also domestic companies/banks which have a closer relationship to government than Alibaba. For example, imagine how hard to start Alipay business when banks don't support you.
That wasn't really my point… I agree there's competition, but my point was that business are behilden to the government's wishes behind the scenes.
Haha, all this is irrelevant when you can always count on your government arbitrarily banning foreign companies.
Not really complaining. It's just business. And we need them more than they need us so they're turning the screws.
Not really complaining. It's just business. And we need them more than they need us so they're turning the screws.
Is it really just business? Why doesn't the USA do the same to all foreign companies as well?
We do. That's how we stop Broadcom from purchasing Qualcomm, get them to move here, and then still block them.
Just business.
The Chinese do it even better because the government is more powerful there than the US Government is here.
Just business.
The Chinese do it even better because the government is more powerful there than the US Government is here.
There is a big difference between blocking Broadcom from buying Qualcomm, and blocking Broadcom from doing business in the US. Which is what the equivalent would be.
It's just protectionism of different sorts. The difference is like that between a member of a Marxist Communist Party and a Marxist-Leninist Communist Party. They think it's super different, but ultimately they're both communists.
> It's just protectionism of different sorts.
Sure, but both being protectionism doesn't make them equal or even comparable.
Placing a 5% fee on certain products and banning all imports are both protectionism, but are in no way comparable.
Sure, but both being protectionism doesn't make them equal or even comparable.
Placing a 5% fee on certain products and banning all imports are both protectionism, but are in no way comparable.
It's called free market.
Free trade benefits established economies over challengers.
Because people don't like Donald Trump.
They do not like him so much, that they elected him the President.
> They do not like him so much, that they elected him the President.
As only the second most supported choice.
After Hillary Clinton, who has long been one of the most widely despised national political figures.
As only the second most supported choice.
After Hillary Clinton, who has long been one of the most widely despised national political figures.
"Why doesn't the USA do the same"
Do you mean "Why doesn't the USA government do the same"? US government is slightly less omnipotent than Chinese.
Do you mean "Why doesn't the USA government do the same"? US government is slightly less omnipotent than Chinese.
You act like the US Government hasn't already banned Chinese companies from buying or doing business in the US. That would be incorrect.
It did. But still, US government controls far less aspects of peoples' and corporate lives than Chinese government.
For violating economic sanctions. Go ask Treasury and they’ll give you the lowdown.
> You act like the US Government hasn't already banned Chinese companies
The U.S didn't ban ALL Chinese companies operating in the U.S. Try setting up a coffee shop or computer repair shop in China as a non-citizen and see how long you last. That's extremely illegal in China. Their government has to approve every foreign business and they rarely do (unless you're some multinational corporation who have made a whole host of concessions.
The U.S didn't ban ALL Chinese companies operating in the U.S. Try setting up a coffee shop or computer repair shop in China as a non-citizen and see how long you last. That's extremely illegal in China. Their government has to approve every foreign business and they rarely do (unless you're some multinational corporation who have made a whole host of concessions.
Just look at Huawei and how our Congress pressured mobile carriers away from selling the phone without any evidence of wrong-doing.
My favorite example, but I am told I am biased when I noticed that in unrelated articles.
It seem to be a well organized negative PR campaign against the company (completed by name calling and downvotes on social media)
It seem to be a well organized negative PR campaign against the company (completed by name calling and downvotes on social media)
[deleted]
eBay is such a horrible user experience that I wonder how it still stands.
Seems like Ebay's status as a public company hurt it.
This is propaganda
I wonder if this gets into all the internal politics on the eBay-PayPal side of things...
I worked at PayPal on the China team. There were a lot of internal politics at the time and I know people on both sides of that internal fight. Needless to say, it was a battle that eBayPal wasn't going to win.
From slow servers hosted in the US data centers having to traverse the GFW to the massive payment friction compared to Taobao's checkout flow.
As for the politics, there were partially policy decisions and partially just a lot of internal infighting. Not to mention the time wasted making PPTs instead of fighting on the ground.
From slow servers hosted in the US data centers having to traverse the GFW to the massive payment friction compared to Taobao's checkout flow.
As for the politics, there were partially policy decisions and partially just a lot of internal infighting. Not to mention the time wasted making PPTs instead of fighting on the ground.
https://money.cnn.com/2018/02/01/technology/paypal-ebay-paym...
They've already split off.
They've already split off.
I was referencing the politics between the two companies at the time they were fighting Alibaba/Taobao/Alipay. I have some firsthand experience on the eBay/PayPal side of things.
When the Chinese market is effectively closed to foreign companies once they make any inroads, it's easy to win against ebay or another US company.
There's no competition like no competition!
> Jack told me: “I started looking at the market and realized that, pretty soon, eBay was going to try to get aggressive with its business in China. They’d start with consumers, but over time they will start coming after Alibaba’s wholesalers. Competition was inevitable. So I decided the only way we can slow them down is to launch a site to compete directly with their Chinese language site."
That, plus the fact that China will just pull the plug on any American business gaining too much traction.
That, plus the fact that China will just pull the plug on any American business gaining too much traction.
> That, plus the fact that China will just pull the plug on any American business gaining too much traction.
So did they? We all know why Google and Facebook isn't in China, but as far as I can tell I don't find similar conflicts regarding companies like Amazon and eBay. The consensus online seems to be that they have been failing in the Chinese market by their own hand. Which does sound pretty plausible considering they aren't even that good in Europe.
So did they? We all know why Google and Facebook isn't in China, but as far as I can tell I don't find similar conflicts regarding companies like Amazon and eBay. The consensus online seems to be that they have been failing in the Chinese market by their own hand. Which does sound pretty plausible considering they aren't even that good in Europe.
Starbucks is doing very well in China (as well as KFC, Pizza Hut, and McDonalds, and their compatriots), and also Apple, Nike, Tesla, Coach, Carrefour, Tesco, and more. (Latter 2 are from Europe.)
Prior to the rise of Taobao, most of my family members didn't really use eBay in China. Most of them prefer using mobile (like the bulk of consumers in China), but if you prioritize the browser experience and 'consistency across the global platform' over what your local users want, well, shrug, let's pretend there's nothing to learn here from a UX perspective...
In contrast, Starbucks has a different user experience when you walk into one in Shanghai or Hangzhou. You place your order and pay for it via phone and pick it up at the register and you don't have to stand in a line. I wish they'd replicate that in the US.
Prior to the rise of Taobao, most of my family members didn't really use eBay in China. Most of them prefer using mobile (like the bulk of consumers in China), but if you prioritize the browser experience and 'consistency across the global platform' over what your local users want, well, shrug, let's pretend there's nothing to learn here from a UX perspective...
In contrast, Starbucks has a different user experience when you walk into one in Shanghai or Hangzhou. You place your order and pay for it via phone and pick it up at the register and you don't have to stand in a line. I wish they'd replicate that in the US.
I still haven't seen a suggestion engine (including the image search verity) nor chat system (in terms of utility) that could compete with what Taobao had a couple of years ago. (It does probably exist in China though). I think people confuse Taobao with AliExpress. The latter being about as useless as eBay. Once you build some history on Taobao, you can spend days just browsing.
> Starbucks is doing very well in China
Starbucks is considered extremely high-end/luxury in China. It's not just an overpriced coffee shop like it is here in the U.S. It's considered 'exotic'.
Starbucks is considered extremely high-end/luxury in China. It's not just an overpriced coffee shop like it is here in the U.S. It's considered 'exotic'.
Google didn't have any problems with China...until it did. No court to sue either, unless you want to waste your time and money.
I am not sure which part of my comment you are addressing. As far as I know the official story from Google was that gmail users were being targeted by the Chinese government. Google deliberately stopped complying with Chinese law by no longer censoring search result and therefor became blocked. Yahoo and Microsoft didn't and are still in China.
Exactly. Sooner or later alibaba is just gonna be another Chinese governments pawn anyways. The government already took over Wanda and hna effortlessly.
I can't imagine a better way to ensure the business suffers in the long term. (coming from an American who see's how poorly run government institutions are)
Yes but it some respects you're comparing apples to oranges. The US political system is perpetually focused on the short term because of the ~4 year election cycle. China has a president for life and single-party rule. They are able to make and execute long term plans, which is why they are currently succeeding at reshaping the global trade landscape. (all roads lead to China, and all that)
It's not just that the government takes over management of the companies, they also manage the population. Where in the US consumers may choose to avoid an entity being mismanaged by the government, in China they may not exactly have that option.
It's not just that the government takes over management of the companies, they also manage the population. Where in the US consumers may choose to avoid an entity being mismanaged by the government, in China they may not exactly have that option.
So if China is long term going to be the end all be all, why are the Chinese elite doing everything in their power to get their cash and kids out of the country?
If the United States' economy is so good, why are the its elites doing everything they can to shovel their money to the Cayman Islands? It's the same thing really.
Looking at the runaway success of China on the world stage I'd say one probably needs to marshal arguments other than "the businesses will fail because of government involvement."
However, compare the situation to other more open countries (e.g. India, Japan, Indonesia ) There are culture, social and language specific nuances that local entrepreneurs understand far better than outsiders, and that accounts for a significant portion of these copycat business success.
I think American business generally have a tough time accounting for the latter into account when they go overseas. IOW, not all of Jack Ma's success stems from the government being on his side.