How eBay failed to gauge India’s e-comm scene

Priyanka Pani Mumbai | Updated on January 15, 2018

India is not the only country where eB ay failed to create magic; eB ay China sold its entire operations to Alibaba in 2005   -  REUTERS

The idea of ‘one size fits all’ backfired for a firm that could have been a market leader

eBay entered the Indian market way back in 2004, when the concept of online shopping was unheard of for a large number of Indians. The only sites that existed then was and Today, e-commerce has become the new normal for several Indian shoppers, who buy not only clothes, but also houses online.

BusinessLine spoke to several former eBay executives and market experts, who on condition of anonymity, said eBay failed to feel the pulse of Indian consumers. Its idea of ‘one size fits all’ backfired for a company that could have been a leader in Indian e-commerce since it had the first-mover advantage.

Failed auctions

“Auctions didn’t work in India and will never work,” said a former eBay official. “Indian consumers care for upfront prices and discounts and the auction mechanism online was cumbersome and took days to materialise. You can’t build volumes in such cases when the payment mechanism online was also not evolved.”

He said eBay lacked aggression and innovation for the Indian market.

“It couldn’t gauge the explosion that was about to occur in the Indian online segment,” he added.

In 2004, e-commerce in India was a mere $20-million industry and was mostly a consumer-to-consumer market with people dealing with second-hand goods. But today it is a $14-billion industry. According to a report by Technopak, the e-commerce sector is expected to touch $80 billion by 2021.

“ebay sensed a good opportunity and entered India with the acquisition of for $50 million, and in those days it was lot of money for a nascent industry,” said another former senior executive at eBay. “However, it did not invest in technology or growth till about 2010.”

Lack of investments

According to him, the Pierre Omidyar-founded global giant would have invested only about $250 million in India till about 2016, whereas its global competitor, Amazon, has committed about $5 billion ever since it entered the market in 2013.

Besides, home-grown Flipkart, which started off about three years after eBay, has invested close to $2 billion in growing the market and spreading awareness on online shopping.

Tiger Global-backed Flipkart has now bought eBay India operations for less than $300 million.

Flipkart recently raised about $1.4 billion from Chinese major Tencent, Microsoft and eBay, and as a part of the deal had to merge the eBay India business with it.

Sources said the eBay merger doesn’t positively impact Flipkart since eBay was hardly doing any business in the country.

They said the total team at eBay India at the time of acquisition would have been around 50.

In 2016, eBay laid off over 300 employees from its R&D centre in Bengaluru. Its India head Latif Nathani also silently quit the company and went back to the US.

Change of guard

According to another former employee, multiple change of guards also, to a large extent, resulted in poor management.

Rajan Mehra, who was the first India head, quit the company in 2008 making way for Amabreesh Murty, who ran the company for five years before quitting the company in 2012 to ride on the e-commerce boom. He went to found online furniture company Pepperfry.

While Murty did not comment on BusinessLine’s query on eBay’s performance during 2008-2012, as that was the peak for many players including Flipkart, Myntra, Jabong, and Snapdeal, it is understood that eBay’s “playbook” was not working in India.

According to market experts, the Indian e-commerce ecosystem has undergone sea change with companies pivoting their models as per government regulations and also changing market dynamics.

Averse to change

“However, eBay didn’t change. It was trying to do things in India that it did globally; but the playbook was not working at all,” said another India official adding that the country was not a priority market for the global team.

eBay, however, saw a few changes during 2008-12. The company set up a development team in India with a focus on indigenisation. It had a shopping cart for the first time in 2008 and its first payment services called PaisaPay.

The company, according to a few current employees, grew 100 per cent year-on-year at a time when the market was growing 20 per cent.

But with the advent of new-age companies such as Flipkart anḍ Snapdeal, who had no legacy issues, eBay started to show decline in business when Indian e-commerce activity was at its peak (2012-14).

India is not the only country where eBay failed to create magic; eBay China sold its entire operations to Alibaba in 2005.

Published on April 14, 2017

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