Ahead Of Its IPO, Alibaba Opens 11Main, Its First U.S. Online Marketplace

China's e-commerce giant Alibaba is gearing up for what will likely be a record-breaking IPO on the NYSE later this year, and ahead of that it is making another kind of splash in the U.S. market that could see the company start to raise its profile more among ordinary consumers. It is launching 11Main, its first online storefront in the U.S. Designed with a slick, tile-style interface, 11Main -- as its Main Street, USA-inspired name implies -- will bring together merchants of many stripes -- covering an Amazon-style soup-to-nuts range including fashion, technology, books and more -- with an emphasis on smaller retailers. The site goes live in beta today. Besides the fact that it happens to be going public here later this year, Alibaba is entering the U.S. at an interesting time for another reason: it seems like it would be an impossible time to gain traction. Emerging market countries are still seeing companies like Rocket Internet launch marketplace portals that are effectively Amazon-style clones to tap into a growing middle class that is starting to shop online in earnest, and retailers that have made little headway into selling online. They are essentially ripe for the picking. Not so mature markets like the U.S. Here, the e-commerce landscape is already dominated by relative old timers, huge retailers like Amazon, eBay and Walmart, who sit alongside tens thousands of smaller sites, catering to an audience that has been buying online for years at this point, and set up with accounts and buying preferences and habits elsewhere. So, to look for traction in the U.S., Alibaba -- which already dominates e-commerce in the very biggest of those emerging markets, China -- is focusing on a few features to differentiate itself. They include a slick, simple interface; a large selection with an emphasis on products that are less mass-market; and in the words of Mike Effle, who is leading 11Main's charge, a more "curated" experience.   On top of that, it's fighting Amazon fire with fire: "We feel like we’re generally about one third as expensive as other large branded marketplaces," Effle says in response to a question from me about what I see as his biggest competitor. But 11Main has not been forged out of thin air: Alibaba already had an extensive logistics and fulfilment business in the U.S. that was built primarily on acquisitions that it made in 2010 and 2011 of Vendio, Auctiva and SingleFeed. Taken on their own, they are already profitable, Effle tells me. Today, these back-end businesses work with thousands of smaller retailers. A typical customer is a retailer that lacks the scale to develop its own distribution and fulfilment network for its online and physical stores, and may not have the IT resources to even create decent online shopping experiences -- all areas where Alibaba's subsidiaries step in and help. Effle, who had worked at Vendio since 1999 before taking over 11Main, says that it was this existing network that Alibaba tapped when it decided to take another step up the e-commerce ladder in the U.S. "We had been looking at what would be unique and different in the market landscape," he says. "Google Shopping was moving from free to a paid model which some merchants adapt while others didn’t fit. We saw supported merchants having hard time with existing sources of marketing: they wanted a less expensive place to sell. They wanted to elevate their own personal identity and brand more. Those were the sparks, and we thought we could build them a new experience." It's been something that has resonated well so far. In the lead up to the launch, Effle says that "thousands" of merchants have approached 11Main to be a part of the site. About half of the merchants that are in 11Main today are existing Alibaba customers, he says. That means that the other half are now potential customers for Alibaba's other (profitable) logistics, fulfilment and other back-end services. In that regard, 11Main becomes a marketing vehicle for what is already a decent cash generator for Alibaba. While Alibaba initially made a killing in China as a B2B marketplace, connecting companies selling wholesale with retailers and service providers, these days the company has expanded into virtually every other aspect of the e-commerce value chain, with mobile payments, online media and premium content, and much more. All the same, there isn't anything exactly like 11Main even in China at this point. In that regard 11Main is a first for Alibaba in more ways than one. "If I had to draw a comparison TMall is the closest," Effle says. When you look at TMall it's much busier and Amazon-like compared to the look of 11Main, but Effle points out that they are the same in the ways that matter most to the company right now. "There are a couple of elements reflective of each other. One is to keep the cost of business low and sustainable for everyone. The other is that they are featuring the brands and shops of others."
Ingrid Lunden

Ingrid Lunden is a Writer at Gigabuzz, focused on covering early-stage startups, especially those with a technology focus and great perks.

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