Alibaba

Why Alibaba's 11Main.com Threatens The Status Quo Of U.S. E-commerce

With immodest pride Alibaba, the Chinese e-commerce powerhouse announced that shortly they would launch 11Main.com. This will be the first time American customers will be able to buy merchandise from an Alibaba affiliate. The site is now in a beta stage and will soon open its doors to customers. The offerings will be strong competition to Amazon and eBay. According to reports the site will offer “hundreds of thousands of products” from 1,000 to 2,000 upscale specialty fashion shops for women, men and children. There will be products for home and outdoors, as well as arts and crafts, hobbies & toys. It will be a wonderland of specialty items.

Mike Effle is 11 Main president and general manager. He hopes to bring to the Internet the diversity of Main Street – some high end, some more moderate. Effle hopes to have picked the best shops in fashion, style, home and outdoors. He has selected many small, emerging brands and businesses such as Solestruck, a shoe store in Oregon that sells new and vintage footwear; Woodzee which sells sunglasses and plants a tree for each frame purchased; and Tiger Bachler’s Alys Grace—the three store California chain which carries famous fashions including Diane Von Furstenberg, Vince, Joie dresses, and famous name scarves.

The 11 Main.com division of Alibaba which was quietly formed in mid-2013, is based in Silicon Valley’s San Mateo, California and has about 200 employees. It has an additional office in Chico, California. It is clear that the company is focused on the latest technology and as a result excellent customer service will be a hallmark of the site.  According to Internet Retailer, 11 Main.com is the brainchild of three e-commerce vendors: Auctiva, Vendio Services Inc. and SingleFeed. The former two were acquired by Alibaba in 2010 and the latter in 2011.

According to Effle, who came to Alibaba from Vendio, the three vendors are still operating, and are working with 250,000 sellers representing $6.5 Billion in annual Internet sales. About half of the stores launching on 11Main.com are current clients of the three vendors. 11Main will charge shops $0.05 per product listing per month plus a 3.5% transaction fee which is capped at $50. Merchants on 11 Main can sign on with one of the vendors to get their listing fees waived.

Alibaba will go public later this year. Revenues in China were over $250 Billion in fiscal 2013 and the excitement surrounding the United States division adds to the interest in this company. It is said the IPO could raise about $20 Billion. Unlike early reports which suggested that most of the merchandise will be cheap goods, such as those offered on Alibaba’s Chinese site, we can now see this is not true as Alibaba enters a second phase. Merchandise offered on Alibaba’s 11Main.com would be seasonal and trendy, making it more of a challenge to the likes of Amazon and eBay, Nordstrom’s HauteLook.com and even sites like Walmart.com or Target.com.