Online consumer-to-consumer market in China - A comparative study of Taobao and eBay

Authors:
Dahui Li;Jun Li;Zhangxi Lin
Affiliations:
Labovitz School of Business and Economics, University of Minnesota Duluth, Duluth, MN 55812-2496, USA;The Rawls College of Business Administration, Texas Tech University, Lubbock, TX 79409-2101, USA;The Rawls College of Business Administration, Texas Tech University, Lubbock, TX 79409-2101, USA
Venue:
Electronic Commerce Research and Applications
Year:
2008

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Abstract

China's fast-growing online consumer-to-consumer (C2C) market merits widespread research efforts. However, it has so far received little research attention. In this exploratory study, we chose Taobao - a leading online C2C auction company in China with more than 70% of market shares - as our research context. We focus on the general market structure of Taobao in terms of three factors: market distribution, market growth, and market concentration. Based on these factors, we reveal the differences between Taobao and eBay. In our preliminary data analyses, we adopt total online reputation scores to measure the transaction volumes of online sellers. We also propose the sample-based Herfindal-Hirschman Index as a measure in the comparison of concentration levels between the two markets and at different time points. Our empirical data analyses suggest that online transaction volumes of Taobao sellers demonstrate many stochastic properties similar to those on eBay with some distinguishing properties, such as a faster growth rate but a lower concentration trend. We note that in 2006 Taobao sellers tended to maintain stabilized transaction volumes while market growth slowed. This reflects the effect of the competition in China's online C2C market on Taobao's performance.