Chinese Consumers Moving Online - China has surpassed the U.S. in Online Retail Sales
The Alibaba Effect

Should Amazon or eBay Be Concerned about Alibaba Entering U.S. eCommerce Market

Alibaba recently unveiled its new venture in the U.S. 11main.com, an eCommerce business offering similar services to Amazon and eBay, a market place for smaller vendors.  The site is not available yet.  Here is a peek of the home page of 11 Main.

11main

Should Amazon or eBay be concerned about Alibaba's move?  In the short-term, they should not.  It took a long time for Amazon and eBay to build their empires in the U.S.  Even with Alibaba's deep pocket behind it,  11 Main is still a new entrant to this market, a lot of things to learn and catch up.  Additionally, consumers' demographics in the States is significantly different.   As a new player in the U.S., 11 Main needs some time to collect and build data to understand U.S. consumers. 

Moreover, U.S. eCommerce market is much different from that of China.  For example, the eCommerce market is more developed in the U.S.  China's online retail penetration of Internet users was 42.9% in 2012, compared to 71.6% in the United States.  iResearch expects that China's online retail penetration may increase to 53.7% by 2016.  Please refer to Chinese Consumers Moving On-line.

The competition in eCommerce space in the U.S. is far more fierece, not only from the few dominant players but also from retailers.  Unlike China, most U.S. brick & mortar retailers have developed sophisticated websites which support ecommerce.  It will take some time for 11 Main to map out the comptition landscape. 

However, in the mid to long-run, 11 Main could be a threat to Amazon or eBay.  First, Alibaba is not new to Americans.   A large number of import and export companies in the world use Allibaba's platform.   The expected IPO later this year will further raise its awarenewss in the U.S.  All this will lend some credential to 11 Main.  Both Americans consumers and vendors may not find it hard to embrace 11 Main.

11 Main may woo away some current vendors of Amazon or eBay by charging lower commission, 3.5% rate, and therefore attract consumers to its site, meanwhile, may put pricing pressure on Amazon or eBay, untimately eroding their profit margin.

However, the biggest growth opportunity for 11 Main, and could be a big loss for Amazon or eBay, is in cross-border ecommerce between the U.S. and China.  Some research shows, increased number of Chinese consumers are shopping directly from overseas through ecommerce.  In 2013,  they purchased a value of $35.2 billion products from overseas, which is expected to increase to $160 billion by 2018.   In the U.S., in 2013, consumers purchased $40.6 value from overseas, the total value to increase to $80.2 billion by 2018.   At this moment, the cross-border transactions are executed on various ecommerce platform, big or small, including Amazon and eBay.  11 Main may be able to provide a more consolidated platform to support such transactions, including providing multiple-lingual services and international payment support.   Once esbatlished in the U.S. 11 Main can expand to the rest of North America, as well as South America. 

It is not difficult to assume, Alibaba has a clear idea of this opportunity and is determined and confident to get a big piece of the pie through its 11 Main, esp. with its loyal Chinese consumers following it, ready to shop around the world.

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