By Dow Jones Business News,
June 11, 2014, 03:14:00 AM EDT
By Juro Osawa
Chinese's Alibaba Group Holding launched a U.S. shopping website called 11 Main, in what could be its biggest foray
into the market dominated by the likes of Amazon.com Inc. and eBay Inc.
The 11 Main marketplace, developed by Alibaba's two wholly owned U.S. units, Vendio and Auctiva, hosts more than
1,000 merchants in categories such as clothing, fashion accessories and jewelry as well as interior goods and arts and
crafts and it plans to keep adding more, the company said.
The shopping site makes its debut as Alibaba, China's largest e-commerce company, is preparing to go public in New
York in what could be one of the largest initial public offerings in U.S. history. Other than 11 Main, Alibaba has been
stepping up its deal activities in the U.S. over the past year, investing in a range of U.S. companies not just in e-
commerce but also in other areas like mobile messaging.
Building a popular site from scratch won't be easy: Consumers already have a number of options to choose from--not
just Amazon and eBay but also startups like Gilt Groupe and Etsy as well as e-commerce sites run by traditional
retailers like Wal-Mart Stores Inc.
Still, while 11 Main is unlikely to challenge Amazon or eBay any time soon, the company sees demand from U.S.
merchants who aren't quite satisfied with selling their products on existing marketplaces.
"There are many small shop owners that are looking for broader platforms, but when they look at the broader
platforms, those are not necessarily structured to support their brands or their identities," said 11 Main President
Mike Effle in an interview. Mr. Effle declined to give any numbers for the company's targets for growth. "Of course, we
would love to be an everyday shopping destination."
On one hand, 11 Main is trying to attract sellers by making the platform less expensive for merchants. The site
charges a commission rate of just 3.5%--about half or one-third of what most other major U.S. shopping sites charge.
At the same time, 11 Main is carefully screening the merchants to make sure the ones who join the site meet certain
standards in terms of product quality, customer service and even the quality of the photos they post online.
"We set a very high bar," Mr. Effle said. "Sellers want a place that can elevate their brands." He said 11 Main has
received thousands of applications so far, and it has rejected a fair number of applicants.
Susan Berry, who runs an online retail business called Oshun Spirit that sells natural skin care and beauty
products, has joined 11 Main. She has been an eBay seller, off and on, since 2001, but is worried about the risk of
relying too heavily on one site. "I'm always looking for alternatives to eBay."
Ms. Berry, who is based in New Hampshire, said she has been told by people from 11 Main that the company has set
aside an aggressive marketing budget to make the new site more recognized among U.S. consumers. "I've seen many new
sites open over the years but none of them have really gained traction," said Ms. Berry.
It is still unclear whether 11 Main will actually generate any buzz, but Ms. Berry says she is more hopeful this
time, in part because Alibaba's deep pockets are behind 11 Main. "I've been down this road before and I'm usually
skeptical, but this time I'm cautiously optimistic."
An 11 Main spokeswoman said the company has a "robust marketing plan" to support the growth of the shops featured
on the new site, but declined to share specific plans or how much it plans to spend on advertising.
Alibaba, which dominates e-commerce in the world's largest Internet market, dwarfs U.S. counterparts in terms of
the value of transactions it handles. In 2013, the combined transaction volume of its consumer shopping sites in China
reached $248 billion, according to its IPO filing last month. That is triple the size of eBay and more than double the
size of Amazon.
Over the past year, Alibaba has struck a string of deals in the U.S. In March, the company said it had bought a
minority stake in TangoMe Inc., a Silicon Valley startup behind the Tango mobile-messaging application, for $215
million. Alibaba last year led a $206 million investment in ShopRunner Inc., an Amazon.com Inc. rival that offers
unlimited two-day shipping from U.S. retailers.
Write to Juro Osawa at email@example.com
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