China's consumer‐to‐consumer (C2C) electronic market has been growing very rapidly. The largest Chinese online auction company. Eachnet. was purchased by eBay but faced tough competition from a new Chinese online auction company, Taobao. Now Taobao's market share is twice as large as eBay's. Why has eBay quickly lost its market share to the newly launched Taobao? What is the nature of this market? On the premise of the customer relationship management (CRM) process model, we conduct a case study to describe the whole picture of this market and to find out what strategies are most suitable to the current Chinese market and likely to lead to success. Our study shows that the C2C market in China is a young and experience‐seeking market whose customers are price‐sensitive, willing to try new services and new vendors, and comfortable with switching. The market is also a social environment where customers' loyalty to a vendor can be built more easily by the vendor's social relation management service than by the transaction service. The findings suggest that vendors in China's C2C market should not only provide a functional service to acquire customers, but also foster the development of social marketing to retain customer loyalty. The social marketing design should be tailored to Chinese culture.
|Published - 2007