The Chinese Internet Company, Alibaba Group Holdings, has launched 11Main.com, an online store for U.S. customers. The announcement was received with a degree of alarm by the media, referring to Alibaba’s landing in the States as “Amazon.com’s D-Day,” a great threat to the company.
11Main.com, is currently in “Betta” version – an invite-only online marketplace that showcases small business retailers.
According to BBC News, the total value of goods sold on Alibaba’s platform last year exceeded that of Amazon and eBay combined. To be more exact, the company accounted for 80% of online commerce in China and exceeded $248 billion in gross merchandise volume last year (2013). Saying this, it might be difficult for Alibaba to break through the online market in the US. So…what’s their competitive edge?
11 Main will differentiate itself from Amazon through its hand-picking of the independent shops and neighborhood businesses available on the site. The company will launch around 1,000 shops including small vendors such as Mabel Chong Jewelry, AXL Brand, NV Blue, Featherweight Clothing Co., and others. Each specialty vendor is selected by invitation to represent the “diversity of Main Street” according to Mike Effle, the General Manager of Alibaba. The site will strive to present innovative products and one-of-a-kind items not available through mass retailers via a “beautifully designed experience.“
Also, 11 Main’s relatively low 3.5% cut of each transaction is the greatest threat for Amazon which charges 10-50% to suppliers. This discrepancy would be a strong incentive for vendors to migrate towards a platform like 11 Main, pressuring Amazon to reduce their percentage….
“Chinese companies are very much like American companies in that by serving their own market, they can become very profitable,” says Forrester analyst K. Willis. “Not many have crossed over. We’re all curious to see how they do as they get into other markets aside from China.”
Well, me too – I am curious to know how 11 Main and the US online e-commerce market is going to evolve over the next few years. Stay tuned.
A few key screenshots of 11 Main site -(Media kit available on their website – http://www.11main.com).
Source: BBC, L2ThinkTank, Forbes
