By Juro Osawa
Chinese's Alibaba Group Holding launched a U.S. shopping website
called 11 Main, in what could be its biggest foray into the market
dominated by the likes of Amazon.com Inc. and eBay Inc.
The 11 Main marketplace, developed by Alibaba's two wholly owned
U.S. units, Vendio and Auctiva, hosts more than 1,000 merchants in
categories such as clothing, fashion accessories and jewelry as
well as interior goods and arts and crafts and it plans to keep
adding more, the company said.
The shopping site makes its debut as Alibaba, China's largest
e-commerce company, is preparing to go public in New York in what
could be one of the largest initial public offerings in U.S.
history. Other than 11 Main, Alibaba has been stepping up its deal
activities in the U.S. over the past year, investing in a range of
U.S. companies not just in e-commerce but also in other areas like
mobile messaging.
Building a popular site from scratch won't be easy: Consumers
already have a number of options to choose from--not just Amazon
and eBay but also startups like Gilt Groupe and Etsy as well as
e-commerce sites run by traditional retailers like Wal-Mart Stores
Inc.
Still, while 11 Main is unlikely to challenge Amazon or eBay any
time soon, the company sees demand from U.S. merchants who aren't
quite satisfied with selling their products on existing
marketplaces.
"There are many small shop owners that are looking for broader
platforms, but when they look at the broader platforms, those are
not necessarily structured to support their brands or their
identities," said 11 Main President Mike Effle in an interview. Mr.
Effle declined to give any numbers for the company's targets for
growth. "Of course, we would love to be an everyday shopping
destination."
On one hand, 11 Main is trying to attract sellers by making the
platform less expensive for merchants. The site charges a
commission rate of just 3.5%--about half or one-third of what most
other major U.S. shopping sites charge.
At the same time, 11 Main is carefully screening the merchants
to make sure the ones who join the site meet certain standards in
terms of product quality, customer service and even the quality of
the photos they post online.
"We set a very high bar," Mr. Effle said. "Sellers want a place
that can elevate their brands." He said 11 Main has received
thousands of applications so far, and it has rejected a fair number
of applicants.
Susan Berry, who runs an online retail business called Oshun
Spirit that sells natural skin care and beauty products, has joined
11 Main. She has been an eBay seller, off and on, since 2001, but
is worried about the risk of relying too heavily on one site. "I'm
always looking for alternatives to eBay."
Ms. Berry, who is based in New Hampshire, said she has been told
by people from 11 Main that the company has set aside an aggressive
marketing budget to make the new site more recognized among U.S.
consumers. "I've seen many new sites open over the years but none
of them have really gained traction," said Ms. Berry.
It is still unclear whether 11 Main will actually generate any
buzz, but Ms. Berry says she is more hopeful this time, in part
because Alibaba's deep pockets are behind 11 Main. "I've been down
this road before and I'm usually skeptical, but this time I'm
cautiously optimistic."
An 11 Main spokeswoman said the company has a "robust marketing
plan" to support the growth of the shops featured on the new site,
but declined to share specific plans or how much it plans to spend
on advertising.
Alibaba, which dominates e-commerce in the world's largest
Internet market, dwarfs U.S. counterparts in terms of the value of
transactions it handles. In 2013, the combined transaction volume
of its consumer shopping sites in China reached $248 billion,
according to its IPO filing last month. That is triple the size of
eBay and more than double the size of Amazon.
Over the past year, Alibaba has struck a string of deals in the
U.S. In March, the company said it had bought a minority stake in
TangoMe Inc., a Silicon Valley startup behind the Tango
mobile-messaging application, for $215 million. Alibaba last year
led a $206 million investment in ShopRunner Inc., an Amazon.com
Inc. rival that offers unlimited two-day shipping from U.S.
retailers.
Write to Juro Osawa at juro.osawa@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires