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  • Alibaba Has Finally Made Its First Move On Amazon And EBay 0 comments
    Jun 12, 2014 7:41 AM | about stocks: BABA, AMZN

    Alibaba's 11Main finally opened in the United States yesterday for those who sign up and receive an email invitation, causing some to postulate that it sparked a D-Day of sorts for Amazon. Of course there are a lot of things Alibaba needs to do in order to actually present a real threat here in the states, but 11Main is the beginning.

    But whether or not online shoppers are brand loyal to Amazon doesn't really matter, because it's the suppliers that are going to be leading the way.

    11Main is giving suppliers a chance to boost their own bottom line with a flat commission rate of 3.5% on anything they sell. Amazon, on the other hand, charges anywhere between 6% and 50%, depending on what category you're selling in. Furthermore, 11Main handpicks suppliers, meaning sellers don't need to worry about competing against a bunch of cotton-headed ninnymuggins just because they have a better price.

    In turn, customers will turn to 11Main because there they know they have vetted suppliers. The chance of inflated prices to cover high commission rates will also be lower.

    Of course, that doesn't mean everyone is going to switch immediately. It will take some time, and Alibaba is going to have to make some acquisitions in order to become a real threat over the long term. Furthermore, the e-commerce in the U.S. already has several well-established players with mature growth rates, where being disruptive is a lot harder than in a market that's still in flux with high growth rates.

    While I definitely don't believe the war has already been won by Alibaba, I agree with the D-Day idea. Alibaba is now on the scene in the U.S. (ahead of its IPO, which is great advertising), and it's sure to make an impact.

    Disclosure: The author is long AMZN.

    Stocks: BABA, AMZN
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