Alibaba Faces A Downfall In US Market
Alibaba will be selling its US subsidiary, 11 Main, to OpenSky.
Alibaba Group Holding is a well renowned e-commerce company, which is also the largest B2B business in the world. The company conducts its business differently and thus, regarded as a market leader in the Chinese market. Despite of the rising competition from various local companies, such as JD.com, it maintains a good lead with a market valuation of more than $216 billion.
The only place where the company lacks is its international market position. So far, it is the winner in the Chinese market but holds a little or no presence in the international domain.
For a very long time, the e-commerce giant is tapping on the US tech sector in order to expand its global outreach. It owned several entities and stakes of the companies in the United States to keep a little hold but it is not working for Alibaba Group. Reportedly, the online retailer plans to sell its US subsidiary, named as 11 Main, to an online marketplace, OpenSky. The subsidiary was the first attempt by the company to gain traction in the US market but failed miserably.
It is a stock swap deal between Alibaba and OpenSky, where the Chinese giant will be taking 37.6% stake in the latter. Furthermore, the management of 11 Main will also be integrated and shifted into the online marketplace. The Chinese company confirmed that the website of its US subsidiary will remain operational for the time being but denied to disclose any further information.
The Chinese giant first launched its US subsidiary, 11 Main’s website in June 2014, but sources familiar with the matter said that it has failed to attract attention and support from the market, which it needed from Alibaba headquarters in China.
The Wall Street Journal reported, “When 11 Main first made its marketplace available on an invitation-only basis, the company said it had a ‘robust marketing plan’ to support growth for shops featured on the site. Still, expectations were not high for 11 Main. Analysts described it as Alibaba’s attempt to test the waters in the U.S.”
The corporate entity went public last year after breaking the Initial Public Offering (IPO) record by posting $25 billion on the market. It generates major revenues from its online marketplaces, Tmall and Taobao, in China. The Executive Vice Chairman of Alibaba, Joseph Tsai stated, “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.”