EBay fails to crack China crisis

EBay's slice of the $674m consumer-to-consumer business in China has fallen significantly

EBay's consumer auctions in China continue to lose market share despite now being free of charge, according to data from a local market research firm. 

The company's slice of the $674m spent on consumer-to-consumer (C2C) sales in China fell significantly during the past nine months as a smaller rival gained ground, according to figures released yesterday by Beijing-based Analysys International.

Martin Wu, chief executive at eBay China, told AFX News earlier this month that revenue earned by eBay China sellers increased more than 10 per cent in the first quarter, while total revenue for users of China's largest C2C auction firm, Taobao, remained unchanged. 

Although the revenue data from Analysys appears to contradict this statement, it is not clear whether it includes eBay's Stores, which might be classed separately as business-to-consumer transactions instead of C2C.

Analysys confirmed to vnunet.com that the figures it had released were correct, but did not answer a request for clarification of this issue.

In the C2C market, where products are sold by individuals to individuals, Analysys' data shows that eBay users' share of total transaction revenues fell to 28 per cent in the first quarter from an average of 31.46 per cent in 2005.

Revenue generated by C2C sales has risen from approximately $644m in the fourth quarter of last year to $674m in the first quarter of this year, accordin g to Analysys.

The decline continues a trend for eBay. The company was originally the leader in China's online auction market, but the introduction of a free auction service by rival Taobao caused a stampede in the direction of the newcomer in 2004.

In January this year, eBay dropped transaction fees from its basic C2C services in China, but this does not appear to have stemmed the tide.