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EachNet.com An Internet Start-up

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EachNet.com An Internet Start-up Powered By Docstoc
					EACHNET.COM
An Internet Start-up in China




                            September 25, 2007
        Cathrine Bonnier, Celine Hallgren, Adam Justin, Tom Van Dam
An enticing Chinese market attracts entrepreneurial investment



     Bo Shao
     Shanghai > Beijing > Guangzhou > ?
     “Missing Back-End”
     Business Model



    Sellers            EachNet.com                     Buyers
          A look at the online trading marketplace in China:
          SWOT Analysis




  Strengths           Weaknesses Opportunities                        Threats
Management skills     Experience           Huge market potential   Many competitors


Early market leader   Negative cash flow   Internet – risky        Internet -risky
                                           market?                 market?

Brand image           Trial and error      Stock of goods          Government
                                                                   regulations
       Another look into the online trading industry: Five Forces Model


Threat of New     Relatively inexpensive and easy to launch a        High
Entrants          website

Bargaining        High number of suppliers, small suppliers,         Low
Power of          potentially homogenous goods
Suppliers*
Bargaining        Decision on whether to purchase or not rests       High
Power of          completely with buyers
Buyers*
Threat of         Many other online marketplaces, physical           High
Substitute        marketplaces, new goods
Products
Competition       Extensive advertising, many firms in the           High
Among Firms       industry
*Buyers and Suppliers in this business model may be the same individual, but
with two economic roles
       Long-term economic prospects of the industry




                                            Economic Profit: Online Trading Industry

   Perfectly competitive
                                     8
    market
                                     6
   Homogenous
                                     4
    products
                                     2
                            Profit
   Easy entry and exit
                                     0
   Perfect information
                                     -2 1   4   7 10 13 16 19 22 25 28 31 34 37 40 43 46
   Long-term economic               -4
    profit is 0
                                     -6
                                                                 Time
On the firm level, the story differs




                                                   Flexibility
            Bo Shao



                                       Employee
                                                   Intangible    Reputation
            Tangible                    Skills


Hardware                Investors

                                                  Organization



Over the long-term, EachNet may sustain its competitive
advantage
 A look into EachNet’s resources




Resources                   V           R       I

Bo Shao               Yes          Maybe?   Maybe?

Investors             Yes          No

Employee skills       Yes          No

Reputation            Yes          Maybe?   Maybe?

Organization          Yes          No

Flexibility           Yes          Maybe?   Maybe?
Expectations for EachNet’s continued development




   Face increase competition
   Increased use for business to consumer
    transactions
   Changing product mix
What would we have done differently?



          EachNet                      We as Executives

Effort in advertising the       Focus on product development
website
No sponsors, two years          Other ways of revenues
without fees for sellers
Widespread knowledge            Develop expertise about
                                ecommerce and online
Willing to take risks in some   auctions
extent                          At times use risk to improve
                                performance
The success of EachNet can be measured on different levels




   Not necessary to earn profit to be a successful start
    up
   eBay paid $150m to acquire EachNet
   Mixed results after 4+ years of development
   Paved the way for more ecommerce firms to
    develop
   Banking system developments
What really happened in the years following




   Acquisition by eBay in 2003
   New competitor website
   Change of strategic focus
   Increased Internet penetration in China
The future success of EachNet can be enhanced through these
strategic moves




   Recruit employees with specialized skills
   Explore new revenue mechanisms
   Increase speed of development
   Balance risk and security to optimize profit
EachNet.com

   Discussion and Questions
    References



   eBay.com. Accessed 24 September, 2007
   Eachnet.com. Accessed 24 September, 2007
   http://www.internetnews.com/ec-news/article.php/2220991. Accessed 24 September, 2007

				
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