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New e-commerce site owned by Alibaba puts the focus on small players

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NEW YORK, N.Y. - China's largest e-commerce company is making its first appearance in the U.S. with the debut of 11Main.com, an invite-only online marketplace that showcases small business retailers.

Industry watchers will be paying close attention because 11 Main is owned by Alibaba, the e-commerce giant in China that filed for an initial public offering in the U.S. in May. Bigger than Amazon and eBay combined, Alibaba had no U.S. e-commerce presence until now.

Forrester analyst Sucharita Mulpuru believes Alibaba won't find it easy to break into the crowded online shopping industry.

"U.S. e-commerce is crowded and relies on high marketing expenses to rise above the clutter," she said. "The hope is high. We'll see if they live up to expectations."

For now, Alibaba is starting small with 11 Main, based in San Mateo, California. The site, which debuts Wednesday in a beta phase, will feature "hundreds of thousands" of products from 1,000 to 2,000 upscale specialty shops and boutiques around the country that were vetted by 11 Main.

11 Main is going live just as Alibaba prepares to go public. Although it's not well-known in the United States, Alibaba is a powerhouse that helped drive the rise of e-commerce in China, a transformation that has given millions of households greater access to clothes, books and consumer electronics in a society that in the 1980s still required ration tickets for some supermarket items.

The 15-year-old company has navigated technical and financial challenges and a battle with eBay Inc. to become the world's biggest online bazaar and is now planning to sell stock in the U.S. Analysts say its initial public offering — planned for later this year— could raise up to $20 billion.

The 11 Main site's layout is clutter-free and without ads, similar to social-media sharing site Pinterest. Shoppers can browse or search by category or retailer. The site features video profiles of some of the small businesses along with its products to give users a sense of what the stores and their owners are like.

Forrester analyst Kelland Willis said Alibaba's strategy with 11 Main is to try to offer the Amazon or eBay shopper a different type of online shopping experience, giving each vendor its own identity on the site and offering a more curated shopping experience.

That's what Alibaba's hugely successful sites offer in China, Willis said.

"They're trying to come in to the U.S. market and compete using that," she said.

Without ads or retailer fees, 11 Main plans to generate revenue by taking a 3.5 per cent cut of each transaction. In return, retailers get 11 Main's national marketing power and reach.

"We want the shops to represent the diversity of Main Street. Some shops are high-end boutiques and some are more vintage," said Mike Effle, president and general manager of 11 Main. The company's name is intended to evoke bringing Main Street online. And the the "11" in its name is meant to represent the "1-to-1" relationship that customers and merchants have on the site, the company said.

Tiger Bachler is one of the site's beta vendors. She owns Alys Grace, a three-shop chain in California's Bay Area that offers upscale clothing and accessories like $175 Chan Luu scarves and $300 Diane Von Furstenberg dresses. The stores are well known in the area and the company already has an online presence at www.alysgrace.com, but Bachler said it's hard to direct customers to the site because the company does mainly local advertising.

"We've been struggling with the ability to reach a large audience being a small business," she said. "We anticipate (11 Main) will be able to give us a wider audience with their marketplace expertise and marketing power."

The site is going to begin as invitation-only when it launches on Wednesday. Consumers can request an invitation at 11main.com.

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