In its second-largest acquisition, Amazon buys the company for $970 million.
The new site, 11Main.com, is actively recruiting merchants to list there. It plans to enable merchants to sell in more than 10 categories including baby products, fashion and art. Alibaba's U.S.-based subsidiaries will manage the site.
Alibaba Group Holdings Ltd., which operates the two largest online marketplaces in China, is planning to launch a new U.S. e-commerce marketplace.
The new site, 11Main.com is still a work in progress and Alibaba and 11 Main did not say when the marketplace would launch.
Alibaba’s two U.S.-based subsidiaries, Auctiva and Vendio, which the Chinese e-commerce giant acquired in 2010, will manage the site. Auctiva and Vendio both sold tools to help merchants list on marketplaces including eBay.com.
“11 Main was a project conceptualized jointly by Auctiva and Vendio,” says an Alibaba spokeswoman. “Over this time, Auctiva and Vendio have continued to operate independently under the auspices of Alibaba Group. Alibaba is run by entrepreneurs and firmly believes in supporting entrepreneurs with great vision and a strong sense of mission for their companies.”
11 Main is actively recruiting merchants to list on the site and to sell in more than 10 categories including baby products, fashion and art. 11 Main is focusing on merchants selling hard-to-find, unique products that shoppers can’t find at mass merchants and other large e-retailers, according to the site. 11 Main plans to be selective in the merchants it allows to sell via its marketplace, targeting those with experience selling online and those with a track record of good customer service, according to a note on its web site.
"We’re focused on building a compelling platform and are extremely pleased with the reception from our merchant partners thus far,” an 11 Main spokeswoman says.
11Main.com says it plans to offer merchants marketing campaigns and services to help them reach new consumers.
The timing is right for Alibaba to launch a U.S. online marketplace, says Kelland Willis, an associate analyst with Forrester Research Inc. Alibaba has strong experience in China providing merchants with flexible tools in social media and customer communications, which are not common in major U.S marketplaces. For example, on the Alibaba marketplaces in China, consumers can chat live with merchants and ask questions about details such as shipping fees and even haggle on the price. Willis says she bought a pair of shoes on one of Alibaba’s marketplaces and negotiated the price down by around 20% via click to chat.
“The key to success [for 11 Main] is getting traffic to the new site and localizing the site to cater U.S. consumers’ needs,” Willis says.
Eric Best, chairman and CEO of Mercent, a company that helps merchants list their products and sell on marketplaces, says he expects Alibaba to face the same industry challenges other popular U.S. retail marketplaces such as Amazon, Google and eBay, including attracting quality retailers. "It looks like they are focusing on select test verticals in the market entry," Best says. "From our experience, sellers welcome alternatives to the mainstay marketplace players, so Alibaba can be in a solid position to capture some of this demand."
Alibaba Group is the largest e-commerce player in China. It operates two online marketplaces in China. Taobao.com, launched in 2003, which is a wide-open bazaar where millions of sellers offer 760 million items for sale and Tmall, which launched in 2008, charges annual fees and takes a commission from each sale. These two sites, which Alibaba calls the Tao companies, host more than 7 million sellers and attract 100 million shoppers daily.
Taobao accounts for more than 90% of China's so-called consumer-to-consumer online shopping market and Tmall.com for 51.1% of business-to-consumer online retail sales in the third quarter of 2013, according to Julia Q. Zhu, a former Alibaba employee and founder of Observer Solutions, a research and advisory firm that helps Western businesses develop and execute their e-commerce strategies in China.
As of March 2013, Taobao.com ranked as one of the world’s top 20 most-visited web sites, according to web traffic measurement firm Alexa Internet Inc. Tmall.com hosts more than 70,000 brands, including U.S. companies like Gap Inc. and Apple Inc., that sell through the site. According to Internet Retailer estimates, Tmall and Taobao marketplaces generated gross merchandise volume of $245 billion in 2013, up 49.4% from $164 billion in 2012. Alibaba has not reported its 2013 sales.