Alibaba’s US Ecommerce Site Closes

Ok, Ecommerce we know is hard for the little guy but even the giant’s can be undone. TechCrunch reports 11 Main – Alibaba’s US ecommerce site – is closing:

Up to now, OpenSky has disclosed nearly $50 million in funding with backers including Highland Capital, Providence Equity, Canaan, The Raine Group and Ron Conway. Not been too shabby with fundraising, although as companies like Fab.com have shown us, you need a lot of capital to get e-commerce businesses off the ground, and even then there’s no guarantee they may work.

It’s a business of scale and gaining customer loyalty; something the Chinese company have failed to achieve anywhere close to their home market. Whether OpenSky is a good investment is another question; sites like these will typically find it hard to compete against Amazon and Retailers that have a direct relationship with the consumer. (just ask Ebay)

The Buy Button Dichotomy

Recode’s Jason Del Rey picks up on the trend of social networks like Facebook and Pinterest adding so called ‘Buy Buttons’ to their properties. As he points out, this creates both massive potential for retailers but simultaneously could also be a threat:

Among the challenges these Goliaths face is integrating inventory and payments systems from retailers big and small that have little experience selling stuff outside of their own storefronts. They also face the challenge of convincing the people who use their service to get used to, and trust, buying stuff from their site for the first time. What’s more, they have to allay fears of retailers that they will steal the customer relationship, banishing them to glorified warehousing and shipping partners.

The key to the success of the ‘buy button’ for both consumers and retailers is thus; will people buy on social networks? and from the retailers perspective, should we allow this?

First up, social networks have traditionally been very poor at converting users into shoppers. There’s a reason why ad dollars are still spent on search engines like Google. This is simply due to intent – people purposely search for products to buy and more often than not, they buy them after searching. Social networks as the name suggests have different intent and it’s not nearly as powerful as direct search. People are unlikely to buy from their social networks either directly or via friends recommendations (remember Facebook’s beacon disaster?)

For retailers, all customer information is captured online via their ecommerce platform and stored there or in other CRM applications. Would they really want to hand this crucial data over to third parties? That’s the likely outcome of relying on the buy button. It’s a clear outcome unless social sites were to allow retailers to tap into this data but then again, who wants to rely on third parties for traffic? Remember Panda, Google’s core search update that left a-gasp – including the biggest sites like eBay.

So while Pinterest is rolling out the buy button to great acclaim, its far from certain that this is really going to change ecommerce. Then again, ecommerce is about experimentation so I guess we all should try.

Shipping Bloodbath or Revolution?

Amazon has announced some stunning news today – free shipping for all:

Amazon.com Inc. is introducing free shipping on thousands of popular, smaller items — makeup, mobile phone accessories, earplugs — in its Web store, without requiring a minimum order.

Quite extraordinary, free shipping could be considered both genius and very risky for Amazon and generally for online retailing.If breaking even is the objective, it will certainly not aid the profitability of Amazon and other retailers that follow suit. But off course customers will love it and perhaps this is driving the move.

Nevertheless, I think merchants should be careful before considering such a strategy, not everyone has access to the kind of preferential shipping rates and resources in general that a company like Amazon has.

For context from the same article:

“Maybe the thinking is they can break even on these transactions and that’s all they really need to do,” said Sucharita Mulpuru, an analyst at Forrester Research Inc. “That fits the Bezos playbook.”