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the consumer web services challenge of East Asia

Changwon Kim has news on his blog that Cyworld is quitting the US market: Cyworld pulling plugs from US.

Cause of failure? Well, for starters (the obvious ones): Cyworld didn’t seem to have sharp strategies as to how to position their service (Was it Myspace or Habbo hotel?); They didn’t localize the service very well; SK Telecom, the parent company, didn’t “get it” yet still tried to put a grip on the business.

Chang suggests that this recession is a good time for Korean entrepreneurs to build the post-Cyworld service that would ideally be more popular outside of Korea. I’d be happy for this to happen, but that barrier to success is quite high.


It’s clear from the existing marketplace that Asia is qualitatively different for consumer web services. I’ve been blogging about this for years and the best example comes from a post by Mitani-san at Asiajin quoting George Godula of Web2Asia; In fact, I’ll use the subtitle instead of the title as the subtitle is more relevant: Why it is difficult for European and U.S. companies to advance into Asia.

Godula’s presentation at Open Web Asia looked at China, Japan and Korea and compared the leading ecommerce, video hosting, sns, bbs and blog service vs. what is popular outside of Asia. It’s a crystal clear chart that shows that sites and services that are popular in North/South America or Europe are just nowhere to be found in Asia. Godula has a good list (be sure to click over to see it) of why companies are unsuccessful in Asia:

1. No formal internationalization/Asia entry strategy
2. Entered Asia too late/ too slow
3. Local HQ has no full decision power
4. Incomplete localization(Translation, Content, Pricing, Branding(name, colours, etc.), Features, Business model)
5. No Local technical development team (Slower time to market, More expensive)
6. Domestic players sometimes simply have the superior technology/business model
7. Global corporate guidelines
8. Local legislation

This is tough stuff. And as I commented on Chang’s blog, I’m not sure there are good examples of Asian-founded successful consumer web services that have been successful outside of their home areas. One might say Naver is doing ok in Japan with their web-based games but to me Flash-games are not consumer web services.

That Friendster’s success in SE Asia (specifically the Philippines) was largely accidental is telling. They’ve been smart to focus on their successful markets but being successful in markets by accident is a scary way to grow a business.

Tonight Jason Calcanis joins Tokyo 2.0.  I won’t be able to make it as I have a previous committment but if you go, ask Jason what he thinks it takes for a non-Asian consumer web service to be succesful in Asia.  Outside of core search (which is a consumer service but one that requires the deepest of pockets) it’s instructive to consider how little Asia has in common with N. America or the EU in this segment.

Jason Calcanis at Web 2.0


$300 million spent…

Look at Meg Whitman’s grimace. Ouch.
For eBay, It’s About Political Connections in China – New York Times
Related, of course:
EBay Is Expected to Close Its Auction Site in China – New York Times

Ecommerce – ecommerce search , the main competitor to Google’s Froogle product search (ecommerce search) has come out of Beta.
On first glance they look a LOT like Google in terms of their search results.
Susan Mernit’s Blog: 3.2 billion web pages from over 40 million web sites

Ecommerce Internet Japan

G-Tools bookmarklets

For those of you who have Amazon Japan affliate accounts, there are now handy bookmarklets for Firefox for G-Tools, which is the best interface to Amazon Japan.

Blogs Ecommerce Internet

the impact of web services

John Battelle, who runs Searchblog and was a co-founder of Wired magazine and The Industry Standard, is chairing O’Reilly’s newest conference, Web 2.0, which is looking at the web as a platform. It looks like a phenomenal event and I am sorry that I cannot be there.
HOWEVER, in my corner of the world, the cutting-edge web-as-platform producers include Alan Taylor of Kokogiak and Jun Kaneko of Goodpic. Both are leveraging Amazon Web Services, but in different and innovative ways. G-Tools
Jun has taken Amazon Web Services to bloggers in Japan by providing a simple interface to create the HTML needed to publish a link to Amazon Japan, called G-Tools. Within 3-4 clicks, or a search form, the user can specify aspects of the HTML that will be generated such as color of the background, text formatting, size of product image, etc. The default setting for the Amazon Affiliate ID is Jun’s own ID, but that too can be changed to your own. Basically, Jun has created a faster and easier way to add Amazon Affiliate links to your blog. Amazon’s own tool, up until the recent redesign, was way too difficult to use. Jun’s tool is simple and easy, and has been so popular with users in Japan that he has had to upgrade and change hosting providers to deal with the massive amounts of traffic his free service generates. It is hard to imagine anyone else in Japan who understands Amazon Web Services better than Jun. Amazon Light 4.0
Alan Taylor recently announced the second anniversary of his groundbreaking Amazon Light platform. The new features include integration of web services from Google, Yahoo! News, GMail, NetFlix, iTunes, Blogger, DropCash, and even the ability to search your local library. It is phenomenal! I cannot think of any other site on the net that is integrating more services than Amazon Light 4.0. Alan too puts his own Amazon Affiliates ID in as default, but allows the user to change it.
Making money
Both Alan Taylor and Jon Gales recently shared with us some information about their Amazon Web Services traffic that is worth noting.
Jon has been running Amazon Affiliates for 5 years and has sold over $46K in goods via his websites. He only receives a fraction of that as an affiliate, but that is impressive.
Alan’s numbers over only 2 years are even more impressive:

Total recorded click-thrus: 87,832
Total number of orders placed: 8,975
Total Revenue (for Amazon): $124,620.00

He only receives a fraction of that amount, but a fraction of a big number is nothing to sneeze at.
In any case, I’d love to hear about other uses of web services that don’t necessarily include Amazon.