EBay relies on Russian tactics for expansion

eBay Inc is exporting a method to boost cross-border sales it pioneered in Russia to 120 territories, as the online marketplace seeks to recapture growth in the face of competition from Amazon and Alibaba.

In many places, eBay still means domestic classifieds; Americans mostly sell to Americans, Britons mostly to UK customers. But a few years ago, eBay’s local head realised that Russians mainly use the site for cross-border commerce. So, Ilya Kretov tweaked the software to let sellers easily target foreigners, resulting in a 50% surge in exports by Russians last year. Now, eBay has handed him 120 countries to replicate the achievement.

“In most emerging markets, where we don’t have localised websites, the penetration of global e-commerce players is insignificant compared with the internet audience — it’s a good source for growth,” Kretov said in an interview in Moscow.

Expansion is crucial for eBay, which has lagged behind industry leader Amazon. com Inc and Alibaba Group Holding Ltd by growth in recent years.

The San Jose, California-based company wants cross-border e-commerce to take off in developing countries like it has in China, whose consumers lead the world in ordering goods directly from merchants abroad.

While Russian consumers typically buy electronics gadgets — such as smart watches and accessories for GoPro cameras — merchants in the country sell things like fishing lures and collectible $30 tin soldiers to buyers in the United States and Western Europe, according to eBay.

Kretov’s sphere of responsibility now includes Africa, the Middle East and most of Europe, excluding large developed markets such as the UK, Germany, France and Italy, where eBay is already a popular domestic marketplace.

Kretov’s team has started activities to boost sales in several dozen countries. This includes rolling out software dubbed ebayMag, which lets listings be shown in other languages, so merchants can tag countries where they want goods to be displayed.

“eBay can expand cheaply to new markets because, unlike Amazon, it doesn’t need to build warehouses and shipping centres,’’ Kretov said.

“Emerging markets are an important growth opportunity for eBay,” said Colin Sebastian, analyst at Robert W. Baird & Co. “If they can build and leverage a buyer base in these countries, then I would expect there will also be a ready market of sellers.”

“eBay has an initiative underway to glean more insights regarding supply and demand, based on sales and searches on its marketplace. It could use that technology to determine which products are in demand overseas and match international buyers with merchants,’’ he said.

The classifieds giant gets the lion’s share of its sales from international markets, such as the UK, Germany, Australia and Korea, and cross-border business from China, but the US still accounts for about 43% of revenue.

In Russia, eBay has about three million monthly users, according to researcher Mediascope. That’s not much compared with an internet audience of about 80 million.

“Failing to become a popular domestic marketplace, eBay has focused on cross-border sales as a niche player,’’ said Fedor Virin, co-founder of researcher Data Insight. “It barely has a footprint in many of the markets now targeted by Kretov’s team.’’

Still, Kretov believes eBay has strengths to leverage as it seeks to reprise Russian growth in other markets.