eBay, despite doing business in more than 20 countries, still earns the bulk of its revenues from US sellers, folks who have been increasingly unhappy about steadily increasing listing fees. When eBay North America president Bill Cobb confirmed recently that eBay wasn’t charging transaction fees to sellers in China, sellers in the US were none too pleased.
Om Malik has a good take on the situation, one that underscores the transparency of Web globalization and the importance of treating all markets equally.
Of course, no company treats all markets exactly the same. Bigger markets get more attention. And eBay needs to grow quickly in China. While eBay’s marketplace revenues in the US dipped this last quarter, international revenues more than made up for the slack. eBay is playing catch-up in China and believes that it needs to lower the barriers to sellers in a market that is extremely price resistant.
So does this mean eBay must start charging sellers in China exactly what it charges sellers in the US?
Not necessarily. Every market is different and will require a different strategy. And emerging markets will generally get subsidized by developed markets.
While any fee increase is going to anger sellers, I wonder if eBay could have mitigated the damage somewhat by helping US sellers understand what it was trying to accomplish in China — and what it is up against in this market.
I think the larger issue here is lack of cultural communication. On absolute terms, US sellers and Chinese sellers are not being treated equally. But most sellers in China can’t expect to see the revenues that sellers in the US are currently seeing. And there is a cultural resistance in China to conducting transactions online. Americans don’t seem to have much of an issue with online transactions; but not so in China. And competition in this market is ruthless. How can eBay succeed if competitors aren’t charging transaction fees?
The issue isn’t about eBay stealing from one market to subsidize another market, but about localizing strategy (and pricing) for each market.
What if eBay doesn’t succeed in China? Will sellers in the US ultimately suffer from fewer potential buyers? Or, will sellers in the US benefit from fewer competitors?
The major lesson I take from this is that if you can’t treat every country equally, at least do a darn good job of educating every country as to your reasons why.