Media and marketers in the US and in Europe have largely ignored developments of e-commerce and social media platforms in China, but the launch of 11 Main by Alibaba in the USA could change this.
As long as Chinese companies were trading in China, they raised little interest. But now they are venturing into the US market, considered wrongly by media and observers as the temple of commerce, it starts to trigger a lot of questions and skeptical commentaries, around two lines of arguments mainly:
1. How can a new platform succeed in an already over crowded environment?
2. How can 11 Main succeed without advertising on its platform?
Comments are mainly around the design and UX of the new platform as well as the nature of the stores already signed up.
Fundamentally, the new 11 Main platform is measured against functions of existing US competitors. Very little attention is being given to the real difference and what I consider the two key factors of success of Taobao and Tmall in China:
1. IM function between buyers and sellers.
2. Monetisation of the platform through marketing tools for the stores as opposed to commission on sales.
Taobao dwarfed eBay, which had 80% market share of the China market in 2006 based on these two factors, and everything leads to believe it is planning to conquer the US on the same principles, even if they may not be applied to the same extent.
In fact, Chinese platforms have developed around utility and ease of use for consumers, creating ecosystems integrating the functionalities of Amazon, Google, Facebook and Instagram. They allow users to perform all their social media and commerce activity with a limited number of clicks, without ever leaving those platforms. Looking at the development of Weixinin less than a year from an IM service to a lifestyle platform, and now a mobile commerce offering, is a tribute to this amazing ability of Chinese tech platforms to integrate.
The breadth of marketing tools available to stores on Tmall, and soon on Weixin, enables small retailers to build their brands, sell and develop partnerships in ways only affordable so far to major corporations. To a certain extent, one could argue the marketing tools developed by Alibaba will increasingly compete against service providers like Adobe and Sitecore as opposed to platforms like Amazon and ebay.
Through Adobe or Sitecore, marketers have a complete, integrated solution for all their marketing efforts. Analytics, social, media optimisation, targeting, web experience management, and it will be interesting to follow the progression of these tools in a market like China, so dominated by two major players: Alibaba and Tencent.
The Western economy has developed with multinational corporations building global brands and it is becoming more and more difficult for small retailers or niche brands to find an economically viable space. The Chinese economy is developing with small brands and retailers, empowered by ecosystems like Taobao, and it is still struggling to build global brands.
Companies like Adobe are likely to grow in China with major brands (mainly Western for the time being) that want to own their data and become less reliant on the Chinese giant platforms. Companies like Alibaba are likely to develop in the West, providing marketing tools and ecosystems to smaller brands and retailers that do not find their space in the current offering to sell and build a brand at the same time.
This is what Alibaba intends to do with 11 Main, and it is the integrated solution for stores marketing efforts provided by this new platform that observers have failed to take into consideration when questioning the viability of this new venture.
Vincent Digonnet is APAC executive chairman at Razorfish.