Alibaba founder, Jack Ma, is bringing his multinational e-marketplace conglomerate to the U.S. If it works, it could change business here forever.
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Right now, Alibaba Group – the $200 billion online marketplace that has been dominating China and most of Asia for the last 15 years – is preparing for what has been described as “perhaps one of the largest IPOs in history.”
By some reports, Alibaba’s move into the U.S. has the potential to disrupt everything we know about e-retail, about online markets, really about selling just about anything anywhere. EBay is under attack, they say, along with Wal-Mart and Target and all of the big boxes. Even the untouchable Amazon might see its first real competition if the whole thing works out.
But that’s a big if.
As of today, Alibaba’s only real presence in the U.S. is a tiny, quirky little website called 11 Main. It’s an interesting concept – it sells one-offs and unique, artisanal pieces mostly. You can’t even get in until you request a membership. (Note, that’s not, “until you register.” Access requires a whole invite process like the old school Gmail days.)
As it stands now, the only threat it seems to be offering is to sites like Etsy – a far cry from Amazon.com.
But, as James Tompkins, CEO of supply chain consultancy firm, Tompkins International, argues, this is just the start. And it’s all part of a much, much bigger plan by Alibaba’s charismatic founder, Jack Ma.
“The fact is, if Jack [Ma] comes in the U.S. as a mass merchant, he will get the stuffing beat out of him,” Tompkins explains. The successful retailers in the U.S. – Wal-Mart, Target, Amazon, all of the “physical and electronic big boxes mass merchants” – are too big to take down all at once. So Ma has had to take a different approach, he says.
That explains the whole exclusivity part of the site, which goes beyond even the customers. Retailers have to make a case too.
“There have been 14,000 companies who have applied to sell merchandise on 11 Main, but Alibaba has only accepted 1,400. That’s 10%,” Tompkins explains. “If you want to go there and you want to sell regular shoes or shirts or chairs, they’re going to say no. But if you have something that’s unique or different, something that you would find on Main Street in a shop, then they are going to welcome you into their store.”
And that’s fine, but it doesn’t really explain how Ma or Alibaba plan to take over anything but the Pinterest niche.
That’s because taking over the world isn’t until step two.
“All Ma is doing now is trying to establish recognition,” Tompkins says. “That’s what the IPO is all about – it’s not about money. Jack doesn’t need money.”
2014, he says, with 11 Main and the IPO, is all about building brand awareness. Ma wants a full market buzz. Once that buzz hits high pitch, then he is going to start with the real site – the full-power, Alibaba marketplace selling everything from office products to women’s shoes at rates that could blow Amazon and other e-sellers totally out of the water.
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It is an enormous, brilliantly conceived scheme to do nothing short but take over the Internet. To change everything. To escape the search spiders, the Amazon fees, the shopping experience and the system American consumers have come to except.
“It’s all kung fu,” Tompkins says. “Ma is a kung fu mass merchant.”
But what does that mean to manufacturers? A lot, it turns out.
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