Alibaba Launches Aggressive U.S. Push

Alibaba Launches Aggressive U.S. Push
Alibaba founder Jack Ma.

NEW YORK — Chinese e-tail giant Alibaba Group is taking aim at America, and the digital landscape is about to get a lot more crowded.

The company’s highly anticipated public debut is expected to take place on the New York Stock Exchange in August.

“Alibaba is a big player entering the market, and they are a formidable competitor stepping onto the playing field,” said Marshal Cohen, chief industry analyst at The NPD Group.

Even before the IPO, Alibaba is building buzz here with its new boutique-focused site called 11 Main, which launched last month.

“The 11 Main shopping experience was designed for the U.S. shopper, from the overall design through to the shops and products most wanted by the U.S. consumer,” said 11 Main president and GM Mike Effle.

The site hosts 1,000 merchants and plans to keep adding more as a way for Alibaba to grow its brand awareness in the U.S. ahead of its IPO. One of the stores featured on the site is Solestruck, a shoe store in Portland, Ore., that sells new and vintage footwear.

The site fulfills two unmet needs, according to Effle. “Consumers wanted a beautiful shopping experience that brings together a hand-selected collection of shops and boutiques, where they can discover new, trusted shops. And [storeowners] requested a more affordable way to reach consumers that also elevates their individual shops’ brands within a trusted environment,” he said.

Insiders said the move was a strong way to introduce Alibaba’s business model to the U.S. market.

“What [Alibaba founder] Jack Ma is doing is building brand recognition and showing that Alibaba is not a retailer but a marketplace connecting merchants and consumers,” said Jim Tompkins, CEO of Tompkins International, a supply chain and retail strategy firm.

11 Main is a prelude to Alibaba’s 2015 stateside launch of a wholesale marketplace offering products at factory prices.

Unlike the firm’s China-based sites Alibaba.com and Aliexpress.com, Tompkins said the U.S.-based site will likely have an American-style look and feel, and would be similar to online shopping sites such as Zappos.com or Amazon.com, which offer a large product assortment.

“Next year you will see the company make its real play in the U.S. with a new website. Ma will be able to build a huge marketplace in America because he will have the brand recognition he doesn’t currently have,” Tompkins said.

He warned that U.S. retailers should prepare for increased competition. Alibaba will compete most directly with online retailers such as Amazon and eBay Inc. or Zalando in Europe. (Amazon did not respond to requests for comment, while eBay declined to comment.)

While many online competitors are concerned about Alibaba’s increased presence, Yahoo is supporting its development.

Alibaba’s strong fourth-quarter results were the highlight of the period for Yahoo, which holds a 22.5 percent stake in the company.

“With its reaccelerating revenue growth and high margins, Yahoo will continue to reap the rewards of its Alibaba holdings,” added Ben Schachter, an analyst at Macquarie Equity Research.

In a recent research report, Morningstar analysts put Alibaba’s equity value at $220 billion and suggested its IPO could raise $26 billion, which would make it the biggest IPO in the U.S. to date.

One concern ahead of the company’s listing is the sale of counterfeit goods on Aliexpress.com, according to designers and merchants.

“What these companies are doing is using images of original product to sell the shoes online, confusing consumers, and shipping fake China copies to the consumer,” said Aquazzura president and creative director Edgardo Osorio.

“Young companies like myself not only suffer from counterfeiters like Alibaba, but also from their American counterparts … who make their business from copying the designs of other designers, in many cases young brands that don’t have the financial power or structure to fight against them,” Osorio said.

For its part, Alibaba recently stated plans to clamp down on merchants offering copycat products. Alibaba Group will strengthen its punishment on offenders through a three-strikes-and-you’re-out enforcement policy for Alibaba.com and Aliexpress.com, Alibaba recently said.