Alibaba set to launch 11 Main – A whole new ecommerce site in the US
There are some predictions that 50% of major US retailers will be gone by 2020. While it is too early to predict the demise of bricks and mortar, it's a no brainer to forecast the rise of ecommerce. Many Americans have never heard of Alibaba, who will soon surpass Amazon in size. And, while it is not branded as Alibaba, their new venture "11 Main" is a great example of increasing differentiation online, and the new star wars battle for worldwide reach. 11 Main is just one example of many new online formats being launched by the "Titans of Ecommerce".
Why this is important: Consumers worldwide will have unparalleled choices of where to shop, and bricks and mortar stores will face an avalanche of competition.
Like most US consumers, most of us don't recognize the orange logo
Most consumers in the US do not recognize the orange logo, or the name Alibaba. Alibaba is the fastest growing ecommerce conglomerate in China. Because of the size of the Chinese market and the accelerating growth of online shopping, Alibaba is projected to quickly dominate ecommerce worldwide.
- Just two of Alibaba's ecommerce portals transacted $170 billion 2012, more than eBay & Amazon combined
- Alibaba invested $200+ million in ShopRunner, which is forecast to overtake Amazon as #1 ecommerce site
- Alibaba is coming to the US to go head to head with Amazon and all retailer web sites
Amazon – US format evolving and scaling their model worldwide
Amazon has been a unique US phenomenon. They have been trying to scale their business under one brand identity. While Amazon has been an incredible innovator in US retail and delivery, Amazon clearly understands the potential of ecommerce beyond the US. It operates in over 45 countries, including China.
Alibaba is multi-brand conglomerate inventing ecommerce specialization
Many Chinese might not even recognize the orange logo or the Alibaba brand. They are much more likely to shop on Alibaba owned and wildly popular consumer oriented Chinese sites Toabao and Tmall. I'm very excited to have an opportunity to meet representatives of TMall when I teach an IMS Retail University workshop in Shanghai next week.
What seems to be a core Alibaba strategy is to invest in names and brands as ways to enter markets. For example, Alibaba's $200+ million in ShopRunner is a key strategy to quickly ramp up Western ecommerce and to compete directly with Amazon, who has literally been doing business on Alibaba's home turf in China.
Alibaba's holistic multi-brand strategy for multi-channel growth
Alibaba has also made significant investments in another strategic brand – AutoNavi map services. It is estimated that 1 in 4 mobile users accessed AutoNavi in China. This bodes well for the explosion of mobility in China and the ability of Alibaba to integrate services like hotels, restaurants and even mobile payments through phones. Clearly Alibaba has a holistic, multi-brand strategy that is focused on more than just selling products online.
Alibaba has already acquired companies like Vendio and Auctiva. These companies were established to help other retailers and companies sell products on Amazon and eBay. Alibaba's acquisition indicates that they see the opportunity to rapidly evolve in ways to directly compete with the new ecommerce market places lie eBay's "The Plaza".
"11 Main" – An Alibaba specialty commerce site coming to US soon
I can almost guarantee that few US citizens will recognize the new 11 Main site as a "foreign" ecommerce site owned and developed by Alibaba. I'm also quite sure that is by design.
As you can see from the screen shot of the home page, 11 Main is quite unique.
- It is a site that is by "invitation only" … you have to apply as a vendor seller
- The site is designed to focus on quality products, non-commodity categories
- 11 Main provides the infrastructure for the site, and the shipping options
- Focus on creating customer relationships and follow-up through integrated marketing
- Approach is to "curate" products and shops in online "mainstreet" US environment
Will 11 Main work in the US? I don't know. It's too early to tell. Initial success will require the ability to recruit the right vendors and sellers with the right products in order to create the "main street" feel, and differentiated shopping environment. It will also depend upon Alibaba's ability to create a US infrastructure for vendor sellers that is: a) as cost competitive as eBay's and Amazon's associate selling structure, and b) able to deliver the high quality consumer experience and services that US consumers have grown to expect via Amazon.
If there's any doubt that 11 Main is targeted directly at Amazon, look at this screen shot:
What does all of this mean for the future of retail?
The space of this one blog barely scratches the surface on the rapid explosion in ecommerce. eBay is certainly not standing still. They have been rapidly testing "Buy it Now" iterations as well as rolling out "The Plaza," which is focused on recruiting associate sellers like 11 Main. eBay has also been very innovative in crossing over to bricks and mortar retailers enabling "shoppable touchscreen" windows on their store fronts.
Even if you are on the right track, you will still get run over if you are not moving fast enough. The large ecommerce retailers are definitely on the right track … and moving much faster than bricks and mortar.
Three key predications for rapid evolution of ecommerce retailing:
- The mega ecommerce players will increasingly specialize with new formats, offerings and services, for both the vendor/sellers and the end consumers.
- Consumers win with increasing competition that creates unparalleled choice & value.
- Traditional bricks and mortar retailers are going to have a very tough time surviving if they don't realize that omni-channel is the new normal.
Stay tuned … the future of retail is about to get very interesting!