Will Americans give up Amazon for Alibaba?
Relatively few American consumers had heard of Alibaba prior to its record-setting initial public offering (IPO). While many more may now be aware of the ecommerce giant as a result of the press surrounding the IPO, the question is whether that will translate to success for the company’s 11 Main site in the U.S.
According to a survey conducted by Ipsos for Thomson Reuters, 88 percent of Americans were not aware of Alibaba prior to its IPO. The company, which represents 80 percent of online sales in China, has succeeded with a marketplace strategy rather than as the primary seller of goods, a la Amazon.com. While that has worked in China, where consumers are willing to search through a sea of online stores for the deals they want, will large numbers of Americans be willing to do the same?
Whether Alibaba finds success here will probably depend on how much of the $231 billion raised in the IPO goes to raising the profile of 11 Main with American consumers.
When Alibaba launched 11 Main back in June, the site had on board more than 1,000 merchants selling arts and crafts, clothing, household interior products and toys. Part of the attraction is that small shops not only have the opportunity to be seen by more shoppers, but Alibaba is reported to be charging as little as half the going commission rate in the U.S.
In a RetailWire discussion from June, Paula Rosenblum, managing partner, RSR Research, wrote, "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."
Alibaba, as an Adweek article points out, has also invested $200 million in ShopRunner, a members-only site that charges a fee that roughly equates to Amazon’s Prime service. ShopRunner members get free two-day shipping, free return shipping and expedited checkouts. A wide number of retailers, including American Eagle Outfitters, GNC, Lord & Taylor, MacMall, Neiman Marcus, PetSmart and Tiger Directs Toys "R" Us, are on the site.
- To U.S. Consumers, China’s Alibaba is a non-entity – Reuters
- Alibaba sets up online shops in America – RetailWire
- Will Shoppers Embrace Alibaba? – Adweek
- ShopRunner, Inc.
What will Alibaba’s IPO and the continuing rollout of its 11 Main site mean for online sales in the U.S.? How do you expect Amazon.com, eBay and other online sellers to react?