NEW YORK ( TheStreet) – Alibaba Group ( BABA) is a huge success in China, but will its business model work in the U.S.?
This massive Chinese ecommerce company, which acts as a middleman between consumers and third-party sellers of a wide range of products, expanded into the U.S. earlier this year with the launch of 11 Main. But Alibaba faces a number of challenges in the U.S., one of which is it's entering a saturated market filled with large ecommerce players like eBay ( EBAY) and Amazon.com ( AMZN) , as well as boutique companies like bonanza and Etsy.
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Alibaba also doesn't have anything new to offer consumers, nor merchants, especially those low-cost Chinese suppliers who are already selling to U.S. consumers via Amazon, eBay and others, said Gil Luria, a Wedbush Securities analyst. Other analysts also note Alibaba lacks brand awareness for 11 Main, faces hurdles in growing traffic to the levels of Amazon and eBay, and is likely to encounter logistical problems in transporting merchandise to the U.S. from China.
But, the company is also well-positioned to seize opportunities in the U.S. using its existing business model. Alibaba's business model could spell trouble for eBay, Amazon, Google and others.
Alibaba's three main websites -- Alibaba.com, Tmall and Taobao -- feature a blend of similar product offerings as Google (GOOG) , eBay and Amazon, said Rob Enderle, principal analyst at the Enderle Group. But he noted Alibaba brings more to the table, citing its "uniquely Asian product source."
Those products give Alibaba a beachhead, and if it can broaden that to include the kind of offerings and capabilities of its main U.S. domestic rivals, Alibaba could potentially "displace them," Enderle said.
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