eBay Alternatives - Part 4 in a Multi-Part Series

In 2004 eBay had just entered China and was planning to dominate the China market. Alibaba was a local Chinese company that helped small- and medium-sized enterprises conducting business online. Most people in the West had barely heard about it. When eBay entered the China market, Jack Ma, founder and CEO of Alibaba, was alarmed that ‘someday, eBay would come in our direction.’ He knew too well that there was no clear distinction between small businesses and individual consumers in China. As a defensive strategy, Ma decided to launch a competing consumer-to-consumer (C2C) auction site, not to make money, but to fend off eBay from taking away Alibaba’s customers”. (Read more from this article here.) “A new Web site name Taobao--meaning ‘digging for treasure’---was launched free of charge for individuals buying and selling virtually any consumer goods, from cosmetics to electronic parts….When (the author) asked a senior manager at Alibaba whether the company was worried that it would be bought by eBay...the answer: ‘We will buy eBay!” (Read more from this article here.)

According to a New York Times article, Alibaba is taking a very different approach in the American market than eBay took entering the Chinese market. They are “being careful not to be seen as over ambitious in the United States...developing contacts, gleaning information about consumers and closely studying the leaders”. (Read more here.) They have recruited seasoned leaders in e-commerce from the likes of eBay, Gap and Walmart. They are networking and investing in Internet start-ups. They are also led by President, Mike Effle, former COO at Vendio. The Times article quotes someone close to Alibaba as saying, “It would be a little naive to think we can simply export our people and our business models into other markets, and specifically into markets as mature as the U.S.” Funny, isn’t that what eBay tried to do in China?

In 2010, Alibaba acquired the eBay listing tools Auctiva and Vendio, which gave it access to over 250,000 eBay sellers. It is estimated that 5 - 10 % of all eBay listings at the time were processed using those listing tools. This gave 11 Main the technology needed to allow sellers to upload their existing eBay listings to their own site. While this process still faces several hurdles, it is anticipated that the process of migrating items from eBay will be improved in the future.  We will share more of our personnel our experience with this in a later blog entry. In September of 2014, Alibaba’s IPO (initial public offering) netted 25 billion dollars. 11 Main is taking an interesting approach during their opening days. They are handpicking vendors through a highly selective vetting process. As of this writing, there are just over 1700 vendors. The site offers products across a variety of categories, including fashion, jewelry, sporting goods and baby products, grouping similar wares into collections that can be displayed in rows of bulletin board-like square images. Vendors also have personalized pages, where they can display their goods, explain their business and feature informational videos. 11 Main seems to be taking aim at the more upscale shoppers of the United States. The site is simple, easy-to-navigate, and features high-quality merchandise. In addition to a more refined look, 11 Main is offering far better terms to its vendors. The site charges a 3.5% sales commission to list on the site, compared to nearly 10% with eBay. Currently, the site does not have a feedback system. They are “working on a better way for users to rate their experiences beyond using the typical five-star system”. Vendors can suggest customers to the site, and will not be charged commission over the next two years for any goods purchased by a consumer gained through those recommendations. Many are wondering if Alibaba is positioning itself to swallow eBay whole.

Another Alibaba investment was made in 1st Dibs, an online marketplace for high-end goods. It was an investment made in to create an alliance with an e commerce player already in the game, rather than an effort to raise capital. Alibaba quickly invest $15 million. This is just one example of many partnerships that Alibaba is forging as it dips into the American market.

Whether these developments have really had an impact on current sales of eBay sellers or not is unknown, but there is no question it will have an impact in the future. There are new players in the American e commerce industry with very deep pockets. They are quietly laying the foundation for the future. They are positioning themselves to be available to top sellers who feel left behind by eBay. Their time to pounce may be drawing near.

The Office of the President of eBay did not comment on this issue.

See the rest of our eBay series here:

Part I - Why are My eBay Sales Down? 
Part II - eBay Takes a Hit
Part III - Google Takes Aim 
Part IV - eBay Alternatives? 
Part V - Fixing the Defects in eBay's Defect System 
Part VI - Breaking Up is Hard to Do: eBay's Split from PayPal 
Part VII - Is eBay's Cassini Really the "Best Match"? 
Part VIII - Is eBay's Cassini Stuck in Orbit? 
The Plan, Part I - Positioning for More than Survival 
The Plan, Part II - Expanding Our Reach Beyond eBay
Making Connections