Alibaba sells e-commerce site 11 Main to rival marketplace OpenSky

June 23, 2015 09:40 AM

Alibaba Group Holding Ltd. will sell its U.S. website 11 Main to rival online marketplace OpenSky, with merchants saying they grew disenchanted with the Chinese company’s first experiment in American e-commerce.

Alibaba will hold a stake in the combined entity, according to an emailed statement Tuesday. The boutique website sought to replicate a Main Street niche-store shopping experience.

China’s biggest e-commerce operator started 11 Main last year, envisioning a shop-window for small-time U.S. merchants that could present an alternative to the mass-consumer facing Inc., No. 1 in the Internet Retailer 2015 Top 500 Guide, and eBay Inc.  Furniture retailer Lishu Rodriguez joined 11 Main expecting Alibaba’s name would buy visibility before quitting the site, while Joel Young stopped selling months ago after shoppers failed to materialize.

“It is a mish-mash of Etsy, Amazon and whatever and whoever wants to sell,” said Young, whose Doc Artisan sells iPhone cases and docking stations made from driftwood. “11 Main thought they could come in with big money and disrupt. Boy, were they wrong.”

The experience of some merchants highlights the difficulty of breaking into the U.S. e-commerce market, even for Alibaba, which has ridden success in China into a company with a market value of $211 billion.

E-commerce in the U.S., which eMarketer estimates will grow 14.2% this year to hit $341 billion, is dominated by Amazon and eBay along with a procession of startups hoping to either fill niches or disrupt traditional models.

At 11 Main, estimated unique monthly visitors for the 30 days ended June 20 was 773,641, according to web analytics vendor Alexa Internet Inc. The median unique monthly visitor number for an Internet Retailer Top 500-ranked retailer is 1.3 million, according to data.

"11Main never seemed to get much traction with either buyers or sellers. Alibaba seems to be explicitly saying theyhave no plans to compete with eBay and Amazon in the U.S. for the foreseeable future. Many on Wall Street believe this is a head fake and Alibaba plans to buy eBay post separation. Only time will tell," ChannelAdvisor executive chairman Scot Wingo said.

Sucharita Mulpuru, vice president and principal analyst at Forrester Research, said, "11 Main was a weak attempt at playing in the U.S. market, and it was clear it had no traction as soon as it launched. If Alibaba made a serious attempt in the U.S. market and still failed, then I'd say that's a problem. Like Amazon in China now. But some marginal site with no value proposition or marketing behind it cannot be considered a serious attempt at anything. It's not yet clear what Alibaba's internationalization strategy is other than making random investments here and there in U.S. companies. "

50,000 brands

Rodriguez of El Dot Designs in Seattle grew disappointed with 11 Main about a month after joining due to some of the requirements.

“It seemed amateur, almost,” she said after quitting 11 Main.

The 11 Main site wasn’t a top priority for Alibaba, which remains focused for now on helping U.S. retailers like Macy’s Inc., No. 7 in the Top 500, and Gilt Groupe, No. 68, sell goods to China. The website was conceived by startups Vendio and Auctiva, which Alibaba acquired in 2010.

As part of the sale to OpenSky, Alibaba will hold a “significant” stake in the combined entity, which will help sales for more than 50,000 brands. The Hangzhou, China-based company didn’t specify how much it would own or provide a valuation on the deal.


‘American way’


While Alibaba has never disclosed 11 Main’s performance, the startup’s executives have pointed to signs of early success. As of early April, 11 Main listed over 2,000 merchants and processed 1.3 million orders, compared with 1,000 sellers and about half a million orders when it began operations in June 2014.

In comparison, OpenSky said on its website it serves more than 5 million members and over 50,000 stores.

Ianthe Mauro, owner of Objects With Purpose in Los Angeles, holds out hope 11 Main can generate the sales of organic candles she had expected although it will take time for the company to get the formula right.

The site produced a promotional video for her business in Los Angeles that would have cost her $10,000 to make.

“I like the mission of bringing Main Street to the e-commerce world,” she said in an interview. “I think they are still learning the American way.”




Top Solution Providers