Taobao's success bolters the argument that we continue to hear about data analytics and how important they are. Students essentially make the argument that eBay loses the Chinese market because they don't understand the Chinese customer. And Taobao, you know, it's just, it's more local. They have all the insights, and it's not surprising that they win.
In an era driven by network effects, smaller players struggle to compete against bigger platforms. The trick to gaining ground on a much larger rival, says Harvard Business School professor Felix Oberholzer-Gee, is choosing a strategy that can’t easily be imitated. A good example is TaoBao’s strategy for displacing eBay in China, back in 2007.