Chinese E-commerce Platform Eachnet.com to Cease Operations

  • Shanghai-based Eachnet.com will shut down transactions on all its online stores and close its servers before August 12
  • In 2003, Eachnet was fully acquired by eBay for a total investment of US$180 million. The firm was later divested by eBay.
Bo Shao Yibo, founder and then-chief executive of Eachnet.com, visits the South China Morning Post at its old offices in Causeway Bay on October 26, 2000. Photo: SCMP
Bo Shao Yibo, founder and then-chief executive of Eachnet.com, visits the South China Morning Post at its old offices in Causeway Bay on October 26, 2000. Photo: SCMP

Eachnet.com, formerly a leading Chinese consumer goods auction site that was acquired by eBay, will cease operations after 23 years in business, making it the latest casualty of aggressive competition in the world’s biggest e-commerce market.

The Shanghai-based company, which once had 70 per cent of China’s consumer online sales market, will shut down transactions on all its online stores and close the platform’s servers before August 12 because of a “change of operations”, according to an announcement posted on the site by operator Shanghai Yingshi Information Technology Co.

Users will not be able to register, log in, or recharge accounts after that date, according to the announcement earlier this month.

Eachnet was founded in August 1999 by Harvard University graduates Bo Shao Yibo and Tan Haiyin, who looked to create an online platform like eBay that would match buyers and sellers of consumer goods.

A Chinese worker checks her computer at eBay Eachnet’s offices in Shanghai on September 16, 2004. Photo: Reuters
A Chinese worker checks her computer at eBay Eachnet’s offices in Shanghai on September 16, 2004. Photo: Reuters

The e-commerce start-up’s early success in China had attracted eBay, which paid US$30 million in 2002 to own a 33 per cent stake in the company. The following year, eBay acquired the rest of the firm for a total investment of US$180 million. The US company spent another US$100 million in 2005 to build up Eachnet’s operations.

The demise of Eachnet reflects the rapid and relentless march of change in China’s e-commerce industry since the turn of the 21st century.

Over the past two decades, China’s e-commerce landscape has been driven by technology giants that helped revolutionise consumer spending behaviour in the country. These include industry peers Alibaba Group HoldingJD.com and Pinduoduo.

Eachnet’s fall also shows how Alibaba, owner of the South China Morning Post, managed to best US e-commerce giants, like eBay and Amazon, in the world’s second-largest economy.

Taobao Marketplace may be the country’s largest e-commerce platform at present, but when Alibaba founder Jack Ma first had the idea to expand the company’s then business-to-business model to include consumers, the platform was seen as an underdog – a David compared to the Goliath that was eBay at the time.

When Taobao launched in 2003, one of the biggest factors that gave it an edge at the time was its free-to-use service. By contrast, eBay’s Eachnet was charging sellers fees for each online transaction and listing.

Alibaba also benefited from eBay’s missteps, including the migration of servers from China to the US that resulted in slow, unreliable service, as well as the decision to unify Eachnet’s interface with eBay’s minimalist one, much to the disappointment of users. As a result, users left Eachnet in droves. Many sellers moved to Taobao, which built a platform that was aesthetically pleasing to Chinese users who preferred colourful images and pop-ups scattered throughout the site.

Taobao in 2008 had about 80 per cent of China’s consumer e-commerce market, according to a case study from the Stanford Graduate School of Business in California.

By April 2012, eBay had severed all ties with Eachnet, which became a subsidiary of Hong Kong-listed Chinese media conglomerate Tom Group, according to information on Eachnet’s website.

Still, a slowdown in online consumer spending has cast a shadow over business prospects for all e-commerce service providers in China. Total retail sales on the mainland in June rose just 3.1 per cent year on year, as China’s economy fell short of expectations and grew by 0.4 per cent in the second quarter. (Source: scmp.com)

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