Alibaba Bows Down To Defeat, Sells US Subsidiary
Jack Ma, Chinese business magnate and founder and Executive Chairman of Alibaba Group, had grandiose plans when he launched into the United States retail market. He envisioned successfully penetrating within a year. But this went kaput, otherwise he won’t be selling his group’s U.S. shopping subsidiary 11 Main to a rival.
Alibaba announced on Tuesday it is divesting its U.S. online marketplace subsidiary 11 Main to competitor OpenSky. The latter will also get Alibaba’s three support and logistic subsidiaries, including Auctiva, Vendio and SingleFeed.
The company didn’t disclose the value of the deal nor the reasons for the sale; only that the arrangement will give it a 37.6 percent minority stake in the online-marketplace operator based in New York. A report by Nasdaq, however, says 11 Main struggled because it failed to gain the attention and support from Alibaba headquarters in China.
Moreover, “the site was just a small operation,” a report by Computerworld says. Alibaba only offered goods from boutique merchants. It didn’t really compete head-on with more established U.S. sites Amazon or eBay, it added.
“The key issue is whether we are going to have something in the U.S. market that will really target U.S. consumers. We think in the long run that’s an interesting market to us. But today, our focus is very much on cross-border activities that connect U.S. sellers with Chinese consumers,” Alibaba Executive Vice Chairman Joseph Tsai said in a November interview.
But Jack Ma could have hinted of the divestment early this month in New York. He said when they launched 11 Main, the target was to generate 40 percent business in overseas market. But in reality, its overseas business only gave two percent into the pot. 11 Main was launched only in June 2014.
“People say, ‘well, when are you going to come to invade America?”” Ma said in a speech in New York. “We do not come here to compete. We come here to bring the small businesses,” he added.