In mid-January, 2010 eBay invited more than 200 Chinese Super Sellers to gather in Shanghai, China. The global online marketplace brand has seen some progress in the past three years after their initial defeat to Taobao.com.

In its early days in China Ebay lost significant market share to the upstart rival Taobao, dropping from 85 percent when it purchased EachNet in 2003, to 34 percent in late 2005. Later the Ebay China operation was folded into a joint venture with Tom Online, but the market share plummeted to only 7 percent in mid-2007 when Taobao was at 82 percent.

Two main reasons have been cited for the failure. Firstly, Ebay charged transaction fees from the sellers while Taobao was free. Taobao also put a lot of effort to ensure their service was customer friendly, including an online chatting tool “Taobaowangwang”, as well as “Alipay” to reduce trading risks. Secondly, Ebay spent a lot of money in the transition of their technology platform from the US to China which, unexpectedly, caused a dramatic drop of traffic due to a problem with the website loading speed. As a result, many users turned to Taobao. These problems may have stemmed from a lack of awareness of the importance of market understanding and brand localization in China.

Now Ebay is trying to make a comeback. They seemed to have learned some lessons and paid more attention to their brand strategy in the Chinese market this time. Taking advantage of the eBay global platform, they are positioning themselves as a provider for cross-border B2C transactions. Different from local users who do not like fees, the cross-border sellers are accepting of globally recognized transaction costs. Thus, Ebay considered cross-border online commerce to be more suitable for them rather than C2C e-commerce in China.

In response to Ebay’s move, Taobao introduced an online foreign-trade website AliExpress, which also focuses on cross-border B2C trade customers. As Taobao and Alibaba are well established brands in the minds of consumers in China, Ebay should be careful not to underestimate or overlook these domestic players.