Over the past two years, eBay, the US online auction giant, has been in an overseas expansion mode. The company made a foray into China, last year, by acquiring EachNet, an ecommerce company. In August, this year, it entered India by acquiring Baazee.com, India’s biggest online market place. However, eBay is not the only US online company, which is expanding overseas. In fact, a host of US online players such as Yahoo!, Google and Amazon have either already entered into new territories or have lined up plans to do so. What is driving the global expansion of these online giants? Having tasted success in their home markets, these companies are trying to fuel their growth by entering overseas markets. These players are attempting to replicate their successful business models in the new markets. However, the key question is: Whether these business models will do well in other markets, amidst concerns relating to cultural differences, regulatory restrictions, payment cycles etc.

Baazee, being a local player, is aware of the local customs and payment systems. Hence, this acquisition gives eBay a strong foothold in the local market. Also, the acquisition would ensure that eBay does not face any problem in expanding its customer base without losing time on understanding the local environment. For example, take the issue of online payment. Baazee doesn’t charge listing fees, though it takes a percentage of the final sale. In contrast, if eBay had tried to enter the Indian market by pushing the PayPal payment mode, by charging listing fees or by urging Indian customers to make use of credit cards, it could have faced great difficulties. Realizing this, eBay has simplified its payment system by offering its customers in India various payment modes such as cheque, credit card, bank transfer, and payment on delivery. Baazee’s local expertise, combined with eBay’s global experience, would help it tap the growth potential of e-commerce in India.