Alibaba sells 11 Main as merchants criticise lackluster sales

Alibaba Group Holding Ltd. will sell its U.S. website 11 Main to rival online marketplace OpenSky, according to a statement on Tuesday, June 23, 2015.
Alibaba Group Holding Ltd. will sell its U.S. website 11 Main to rival online marketplace OpenSky, according to a statement on Tuesday, June 23, 2015.PHOTO: REUTERS

SAN FRANCISCO (BLOOMBERG) - Alibaba Group Holding Ltd. will sell its US 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 e-mailed statement on Tuesday (June 23). 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 US merchants that could present an alternative to the mass-consumer facing Amazon.com Inc 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 materialise.

"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 US e-commerce market, even for Alibaba, which has ridden success in China into a company with a market value of US$211 billion (S$281 billion).

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

Mr 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 was not a top priority for Alibaba, which remains focused for now on helping US retailers like Macy's Inc and Gilt Groupe 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 did not specify how much it would own or provide a valuation on the deal.

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 US$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."