EBay: China "Failure" Sign of No Growth?
Web Editor, "Mad Money"
EBayannounced today that Chinese internet firm Tom Online will take over its auction Web site in China. Some analysts are viewing that as a failure on eBay’s part to successfully penetrate the market there. EBay’s foray into the online retail space with eBay Express hasn’t panned out either. Sales on that companion site during this holiday season – and overall, for that matter –have been lagging expectations. Does eBay have any growth left in it?
The Wall Street Journal’s Vauhini Vara and Jupiter Research analyst Patti Freeman Evans were on “Power Lunch” to debate the issue.
“China’s a tough nut to crack,” says Evans. The country does not have a mature and stable market that can guarantee return on investment. Also, eBay’s difficulty in China illustrates how each country has vastly different opportunities and needs. Evans thinks the partnership with the more platform-based firm Tom Online is a move in the right direction. The Journal’s Vara seems to agree, saying that other U.S. internet companies partnered their way to success in China.
Evans is projecting more growth for eBay in its core business of auctions, but says its market dominance doesn’t extend beyond that space.