Alibaba is already drawing plenty of interest for its 11Main.com site in the United States, not least because whilst Amazon merchant clients may like the volume sales achieved via the behemoth, they are heavily critical of the commission they have to pay. They also dislike competing with Amazon itself in many product categories, which reduces margins even further. There are gripes with eBay too over its high fees – usually 10 per cent in most categories plus the additional costs attached to using Paypal.
The timing of Alibaba’s entry into this huge market could not, many say, have come at a better time and the first shots have been fired which see it offer merchants a commission rate of just 3.5 per cent, less than half of the rate charged to most merchants by Amazon, and a third of that charged by eBay. As with all marketplaces, the key driver is volume – volume and depth of product to entice the buyers – and volume of traffic to entice the sellers.
Alibaba looks set to achieve both in the United States where, to date, both Amazon and eBay have dominated and faced little in the way of competition. Many expect that both players will now be forced to review commission rates downward to meet Alibaba head-on.
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