Alibaba Group Holding Ltd. (NYSE: BABA) has decided to sell its U.S. online shopping website to a U.S. rival. This exemplifies the challenges the Chinese e-commerce company has been facing as Amazon (NASDAQ: AMZN) and eBay (NASDAQ: EBAY) dominate the Western markets.
Alibaba announced that it will be selling 11 Main, an online marketplace they started last year, to OpenSky, an online marketplace operator in New York. In return, Alibaba will receive 37.6% stake in OpenSky. Alibaba also announced another deal with its financial-service affiliate, Ant Financial Services Group, to invest around a billion dollars into an Alibaba food-delivery booking service in China called Koubei. Earnings have slowed down for Alibaba so these two deals are good indicators of their priorities. Alibaba has currently refrained from the U.S. market, but still hold around 80% of the Chinese market.
11 Main first made its marketplace available on an invitation-only basis in June 2015. Merchants were counting on Alibaba supporting 11 Main to make the marketplace successful. On the contrary, 11 Main struggled to gain attention from Alibaba’s headquarters in China. Alibaba has affirmed that the company’s international strategy focuses primarily on helping overseas merchants and brands sell their goods to Chinese consumers, rather than expanding their e-commerce services to compete with China.
“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 according to Forbes.