China's largest e-commerce company is debuting its first U.S. online venture, 11Main.com, an invite-only online marketplace that showcases small business retailers.
Alibaba, which became a giant in China by buying up digital businesses, has plans to list in the U.S., but is just beginning its foray into U.S. e-commerce.
Forrester analyst Sucharita Mulpuru believes Alibaba won't find it easy to break into the crowded online shopping industry dominated by Amazon and eBay.
"U.S.e-commerce is crowded and relies on high marketing expenses to rise above the clutter," she said. "The hope is high. We'll see if they live up to expectations."
11Main.com, based in San Mateo, California, debuts Wednesday in a beta phase. It will feature "hundreds of thousands" of products from 1,000 to 2,000 upscale specialty shops and boutiques around the country that were vetted by 11 Main.
In marketing the products of largely unknown makers to a large internet audience, Alibaba is setting out with a venture similar to its own first online foray, which marketed China's products, including individual machine parts, to an international audience.
The 11 Main site's layout is clutter-free and without ads, similar to social-media sharing site Pinterest. Shoppers can browse or search by category or retailer. The site features video profiles of some of the small businesses along with its products to give users a sense of what the stores and their owners are like.
Alibaba, started out in the apartment of Jack Ma, a former English teacher, as a way for Chinese companies to sell goods internationally.
It grew by gobbling up rivals and related businesses, a strategy it is likely to continue pursuing in North America once it has an injection of cash from an IPO.
With the spread of cellphones and the internet, Alibaba has helped give millions of households in China greater access to clothes, books and consumer electronics in a society that in the 1980s still required ration tickets for some supermarket items.
In the last few months it has continued its acquisition spree in China, buying up UCWeb, a mobile browser developer, striking a deal with Shanghai Media Group to develop an entertainment platform and buying football club Evergrande.
Analysts say its initial public offering — planned for later this year— could raise up to $20 billion.
11 Main plans to generate revenue by taking a 3.5 per cent cut of each transaction. In return, retailers get 11 Main's national marketing power and reach. With the debut site is by invitation only, consumers can request an invitation online.
"We want the shops to represent the diversity of Main Street. Some shops are high-end boutiques and some are more vintage," said Mike Effle, president and general manager of 11 Main.
Tiger Bachler is one of the site's beta vendors. She owns Alys Grace, a three-shop chain in California's Bay Area that offers upscale clothing and accessories like $175 Chan Luu scarves and $300 Diane Von Furstenberg dresses. The stores are well known in the area and the company already has an online presence at www.alysgrace.com, but Bachler said it's hard to direct customers to the site because the company does mainly local advertising.
"We've been struggling with the ability to reach a large audience being a small business," she said. "We anticipate (11 Main) will be able to give us a wider audience with their marketplace expertise and marketing power."