The nature of the emerging C2C electronic market in China: a case study from social network theory and CRM perspectives

China’s C2C electronic market has been growing very rapidly. Eachnet, which had been the largest Chinese online auction company, after merging with eBay, quickly lost its market share to a newly-launched Chinese company, Taobao. What is the nature of the market? What strategy is the most suitable to the current Chinese market and likely to lead to success? Based on the CRM process model, we conduct a case study to find out answers. By comparing eBay and Taobao in the customer relationship initiation stage and termination stage, we find out that the C2C market in China is a young and experience-seeking marketplace whose customers are willing to try new services and new vendors. By comparing eBay and Taobao in the customer relationship maintenance stage, we find out that the market is a social environment where customers’ loyalty to a vendor can be built more easily by vendor’s social relation management service than by transaction service. These findings suggest that vendors in China’s C2C market should provide functional service to acquire customers as well as develop social marketing strategy to retain customer’s loyalty. The social marketing design should be tailored to Chinese culture.