Alibaba's invitation-only website finds a US niche

Alibaba founder Jack Ma has found a niche in the US consumer market. The company's newest endeavor in the states is 11 Main, an invitation-only shopping website launched last month.

The San Mateo, California-based company is a spinoff of Alibaba's 2010 acquisition of online retail management companies Auctiva and Vendio. The site features 500,000 products in nine categories: fashion, toys, entertainment, home, collecting, jewelry, sporting goods, tech and baby products.

The site competes directly with eBay and Amazon, and caters to sellers who might get lost in the sea of offerings on those sites. 11 Main "is unique as it empowers entrepreneurs," said Porter Erisman, former vice-president of Alibaba.

The site charges a commission rate of just 3.5 percent, about half or one-third of what most major US shopping sites charge, and hosts more than 1,000 merchants, according to The Wall Street Journal.

"From what I understand, the site is going to be different from eBay in the sense that it will be more exclusive. They're not going to let anybody sell anything," said Kelland Willis, a global e-commerce analyst at Forrester Research, a global research and advisory firm with headquarters in Cambridge, Massachusetts.

"So eBay is really about enabling anybody to sell something online, whereas 11 Main is going to be more serious about a collection of items,” she said.

The site did not respond to email requests from China Daily for comment.

The 11 Main homepage and initiation process bear resemblance to the rising tide of US flash-sale sites, Fab, Rue La La, Gilt, HauteLook, among others, which require email signup, and others which require a wait list. The interface and functions of the site resemble online handmade and vintage marketplace Etsy.

Willis, who is based in Los Angeles, said she believes Ma is using the localization skills he learned in China, "which really just comes down to understanding what the customer needs,” or finding “where the hole is in the market, and then serving those needs.”

"What Alibaba did with Taobao was basically take eBay and flip it upside down,” Willis said. “They took the eBay business model and localized it for the Chinese market.”

Vendors can create personalized pages to display their goods, and also explain their business and feature informal videos. The site also features a special "Made in California'' section.

Like eBay, 11 Main does not handle the products on its site, leaving vendors to deal with logistics and shipping. But unlike American counterparts, the site currently does not have buyer-seller feedback communications.

11 Main is carefully screening merchants to make sure those who join the site meet certain criteria in terms of product quality, customer service and even the quality of the photos they post online, according to the Journal.

Willis compared Alibaba's branding of 11 Main to a TV network.

"If you watch Mad Men or Breaking Bad, they don't say 'we're AMC, this is what AMC does,' they're more likely to promote the show itself. And I think that Alibaba approaches their different entities in a similar way." said Willis. "I don't know if they necessarily want Alibaba to come to mind first when 11 Main is mentioned."

“They really put thought into the name,” she said. “Main for Main Street and 11 stands for the one-to-one, direct consumer-to-seller relationship that they want the site to be about.”

Erisman, who in recent years made a documentary about the company's road to success, said Alibaba has learned a lesson from eBay's mistakes in China. "You can't take eBay and put it in the Chinese market, just as you can't take TaoBao and put it in the US market," Erisman said.

Alibaba has allowed local management in the US to run site, and this has helped the site to develop as an American-style shopping website, according to Erisman.

The combined transaction volume of Alibaba Group's consumer shopping sites in China reached $248 billion, according to its IPO filing last month, triple the size of eBay and more than double the size of Amazon. The launch comes just before Alibaba's IPO prepares to go public on the New York Stock Exchange, which could be one of the largest initial public offerings in history.

Jack Freifelder contributed to this story.

Contact the writer at readers@chinadailyusa.com.

For China Daily

(China Daily USA 07/09/2014 page1)