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[8 comments]

Alibaba sets up online shops in America

June 12, 2014

Being China's largest e-commerce company means that Alibaba is no slouch. But that doesn't mean the company's first site in the U.S. will roll over the likes of Amazon and eBay either.

Alibaba, which has filed for an initial public offering that could help the company raise upwards of $20 billion, has announced the planned launch of 11 Main, a marketplace of more than 1,000 merchants selling arts and crafts, clothing, household interior products and toys. A key selling point of the new site for merchants is lower commission: Alibaba will reportedly charge as little as half the going rate in the U.S.

The new marketplace has been compared to Etsy in some reports, but Mike Effie, president and general manager of 11 Main, doesn't believe that is accurate. Many of those selling goods on Etsy are hobbyists whereas all the sellers on 11 Main are merchants.

"These are operating specialty shops, boutiques and shop owners," Mr. Effle told Internet Retailer. "The idea is for shoppers to be able to visit Main Street shop owners and support small businesses."

Aly Grace, a three-store upscale clothing and accessories business operating in the San Francisco Bay area is one of the first merchants on the 11 Main site.

"We've been struggling with the ability to reach a large audience, being a small business," Tiger Bachler, the owner of Aly Grace, told The Associated Press. "We anticipate [11 Main] will be able to give us a wider audience with their marketplace expertise and marketing power."

Susan Berry, who runs an online skin and beauty care company called Oshun Spirit, is an eBay seller who is also joining 11 Main. She said the new site has an aggressive marketing budget that makes her hopeful for its success. "I'm always looking for alternatives to eBay," she told The Wall Street Journal.

Discussion Questions:

What do you think of Alibaba's small merchant approach as it enters the U.S. market? What will it take for 11 Main to achieve success?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is 11 Main to become an e-commerce force in the U.S. in the years ahead?

Comments:

For it to succeed, 11 Main will need to attract a large number of small merchants in a wide variety of categories. Consumers will want an efficient product search capability, concise shipping information and easy, secure checkout. The entire process will need to be backed by excellent customer service, merchant ratings and the ability to appeal to Alibaba in the event of dissatisfaction.

If Alibaba can do this they stand a chance of success. Otherwise, 11 Main will be seen as yet another Amazon or eBay wannabe.

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Max Goldberg, President, Max Goldberg & Associates

The success of 11 Main is completely dependent on what retailers do with the money saved from their low commission rate. If the retailers maintain the same price, the site will fail. If they pass at least a portion of the savings on to consumers, it's going to rock the house.

The other thing about Alibaba that no one mentions is its B2B site, alibaba.com itself. This is another boon for small retailers, and minimum order quantities are small. I suspect this will prove very helpful for the independent, because the stuff is cool, but crazy cheap.

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Paula Rosenblum, Managing Partner, RSR Research

The success issues are always the same -- trust, performance, data security, payment security, accuracy of description, seamless and hassle-free shipping, etc.

Do all those things right and you earn the right to compete, but not a guarantee of success.

The idea of attracting small merchants is an interesting one. One assumes it is an attempt to enter the market under Amazon's radar -- but it's probably already too late for that.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Sure Alibaba will gain some traction here in the US. But the long term, monster wins for the retailer will remain in global markets from Asia to Europe. The reason? "Modern Retail" models push a dominant majority of volume through chain stores. Older retail models (still in force in many parts of Asia) are dominated by smaller, independent shops, which is Alibaba's wheelhouse.

The looming opportunity for Alibaba is to control e-commerce in global markets -- as chain retailers begin to take over the marketplace. Shoppers, who are already accustomed to using the service, will only be too delighted to have access to more merchandise from chains as they emerge. While Amazon has a presence in China, India and Japan, I am not sure that Amazon is positioned to infiltrate those markets like Alibaba is ...

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Liz Crawford, VP, Strategy & Insights, Match Drive

For Alibaba to succeed it will have to have incredibly efficient processes in terms of website navigation, security, adaptation to consumers, AND fulfillment. In addition, unless all these processes meet or exceed Amazon's and/or products are different from Amazon, it will be difficult for them to compete. If they can offer different products at the same price with equivalent processes then they could be quite successful.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Amazon and eBay spend the entire day, everyday, selling the benefits of doing business with them. This is a large reason why the consumer will visit their sites. Another important part of their sales pitch is that consumers will find what they want quickly and at the "very best price". Fast delivery at acceptable prices is always an important part of the sales message.

If 11 Main can provide faster and easier services with better prices the only thing left to do is to effectively market the site. As in previous discussions about how a newcomer might successfully enter the market, site content and construction is an accepted secondary consideration. Emphasis on vendor/merchant attraction as a priority for success in the market should in fact follow the offerings of site construction and user friendliness.

I am of the opinion that the sellers will follow the floor traffic and that the floor traffic goes to new places rather easily, but will not return if the site is difficult to use and understand and loaded with products and services that do not compete well in the e-commerce market. There are many other important ingredients for e-commerce success, like ease of returns, customer service and product integrity, but the internet site must be designed for ease of use first and foremost, with fast and supportive customer service help.

Both eBay and Amazon are very easy to use and the companies will always demand and forcefully supply customer satisfaction. Foreign businesses are often not used to providing the kinds of services that western consumers expect without delay. Additionally, the laws they are governed by may not be as consumer friendly as those we have in the west. In the time it takes to familiarize themselves with the west and what it expects from any and especially e-commerce retailers, the opportunities and acceptance they seek might be permanently damaged. As always, time will tell what we have here.

'gjarnoldjr'

11 Main is a small entry point for Alibaba in the US and a first step in stitching together an Alibaba presence (investments in ride sharing app Lyft, chat app Tango, b2b platforms...). They can afford to go slow and scale fast. The curated, small merchant approach to deliver a Main Street digital experience could differentiate this initial step with a careful selection and setup of their ecosystem to deliver value to buyers and sellers.

As to immediate success for 11 Main, the consumers have an established set of expectations from their experience with Amazon and eBay along trust, service, speed, product and seller information, easy and secure transactions, and so on. These are becoming table stakes to be in the game. 11 Main must at least match and then expand through its selection of merchants, products, and user experience. It's interesting that Alibaba's Alipay (PayPal equivalent) is not part (yet) of the 11 Main rollout.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Funny thing how we in retail like to pooh pooh loyalty. Loyalty shmoyalty, who is loyal anymore? But the truth is ... drum roll please ...

We Americans are pretty darn loyal to our country. I'm gonna go out on a limb here and say, it's gonna take "pulling out all the stops" for 11 Main to truly win us. We will be comparing and contrasting every step of the way against our beloved Amazon and eBay.

Hey, that's my 2 cents!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

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