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eBay’s India journey: 14 years of hits and misses

31-July-2018
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eBay’s India journey: 14 years of hits and misses

Last week e-commerce major Flipkart announced its decision to close down eBay India and said it will soon launch a new platform to sell refurbished products. The announcement followed eBay’s decision to end the partnership with Flipkart and re-launch their India business with different offerings focusing on cross-border trade.

Business leaders termed the shutdown of eBay as “inevitable” and Flipkart’s decision to venture into refurbished goods business as a “smart move”.

Suresh Reddy, Chairman and CEO, Brightcom, said, “With Walmart coming in, this was an inevitable outcome. eBay had to be out. It was a clear case of conflict of interests.”

About Flipkart entering refurbished goods market, he said, “There is a huge market for refurbished goods. Strategically, it’s a very smart move. But it all depends on how well it is executed. But it is good, both from consumer and market perspective, as it is always good to have competing platforms.”

Brand expert N Chandramouli, CEO, TRA Research, believes that eBay will most likely come back.
“This shut down is only a change in position, which was necessary after the Walmart deal. It must have been a part of the deal structure. eBay is likely to restart soon in a non-competitive space with Flipkart.”

Commenting on the refurbished market, he said, “India is a value conscious market and the refurbished goods segment has been functioning in an informal way for ages now. However, if Flipkart is entering this marketplace, it needs to be very careful about the promise versus the delivery. If they are able to build trust, they can enjoy success. Else, the business will collapse.”

Talking about what went wrong with eBay, Ashish Tiwari, Head- Digital Marketing, Hero Motors Company, said, “Hyper growth market requires investment and focus, which eBay lost somewhere on the way. For Flipkart, it did not make sense to continue with the investment required to keep it alive. It was eminent that Flipkart was only waiting for users to migrate from eBay to its own platform before they called it quits.”

About Flipkart’s plan to enter the refurbished market, Tiwari said, “Indians have a tendency to buy fresh goods and it would take an attitudinal shift before refurbished items become acceptable."

eBay’s India journey began in 2004 after it acquired Baazee.com for USD $50 million. In the initial years, they recorded decent growth, thanks to mobile penetration in India. Over time, the platform managed to build a loyal user base and recorded more than 2 million registered users at one point. But the arrival of big players such as Flipkart in 2007, Snapdeal in 2010 and Amazon in 2013 eventually slowed down eBay’s business.

While big e-commerce giants invested heavily in customer acquisition and aggressive marketing, eBay stuck to limited investments. As eBay failed to capitalize on its first-mover advantage, it also started losing customers.

As the business slumped, the company reportedly cut jobs and tried fewer marketing initiatives to boost sales. In 2016, eBay launched its first integrated campaign after a gap of three years, but it could not help the brand much. In an effort to remain a significant player in the Indian e-commerce space, eBay decided to invest in Snapdeal. In 2014, eBay invested in Snapdeal, but the decision backfired and the company faced losses.

Last year, Flipkart had raised USD 1.4 billion from global technology majors eBay, Tencent and Microsoft. In exchange of an equity stake in Flipkart, eBay had made a cash investment of USD 500 million and sold eBay.in (India business) to Flipkart. But after spending almost 14 years in the market, the brand failed to attract customers and started losing ground to other major e-commerce players.
As eBay now plans its second innings in India, we wait to see what new it brings for Indian consumers and how the brand will change its fortunes.

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