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eBay Alternatives - Part 4 in a Multi-Part Series

March 21, 2015

eBay Alternatives?

As our company reviewed the events of 2014 that impacted eBay, we found ourselves digging deeper into the behind the scenes workings of the eBay Marketplace itself. For years, our only association with eBay was as a platform to sell our product. Beyond that, we didn’t give it a second thought. We had already learned of the impact of the security breach and the Google algorithm change, but there was so much more to information to sift through. As we sifted, we found the third major event that may very well have impacted our sales - the opening of a new marketplace, designed with small to medium sellers in mind. The name of the site was 11 Main. Another eBay wanna be has come to town...right? Not quite. For this story to be told correctly, we have to go back eleven years to 2004.

The following are excerpts from the book The Chinese Dream, as taken from several Forbes articles written by author Helen H Wang.

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.




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