SHANGHAI — The battle of Alibaba versus Amazon is about to get a lot more interesting.

Alibaba Group Holding Ltd.’s announcement that it would launch a new e-commerce site in the U.S. via two of its subsidiaries is likely motivated by the Chinese e-commerce giant’s plan to launch an initial public offering sometime this year, analysts said. It is expected Alibaba will list in the U.S., in an offering that could value the company at up to $190 billion.

The firm’s U.S. site,, will be launched by Vendio Services Inc. and Auctiva, subsidiaries of In June 2010, Alibaba acquired Vendio, an e-commerce service provider that helps merchants sell their products on sites like Vendio was Alibaba’s first U.S. acquisition. Shortly after, Alibaba purchased Auctiva, which is a solutions developer for sellers.

Alibaba, which commands about 5 percent of the Chinese retail market, has been tight-lipped about the new e-commerce venture in the U.S., declining interview requests about the project. A spokeswoman from 11 Main said in an e-mailed statement that the site will be a “destination dedicated to helping a hand-selected collection of compelling merchants reach consumers.

“Right now, we’re focused on building a compelling platform and are extremely pleased with the reception of our merchant partners so far,” the statement said.

According to Kosha Gada, principal in the media, consumer and retail practices of global management consulting firm A.T. Kearney, in order for Alibaba to effectively compete in the U.S., the Chinese firm must identify niches of consumer demand that aren’t being served by Amazon or eBay.

 “They are there, [but] it’s definitely a tall order because [Amazon and eBay] are constantly mining the market for these things — and they have a proven track record of innovating very quickly,” Gada explained, adding that Alibaba’s innovations to date have largely been based on tactics that have worked in the U.S. market which they’ve then adapted to China.

This is a different skill set in itself, and has proven to be quite fruitful in China, where in terms of the number of transactions made, Alibaba is the world leader (not to be confused with the dollar amount spent, as the average cost per order is lower in China than it is in the U.S.).

“Without sounding too cynical, right now Alibaba is focused on anything that will enhance its perceived value in the lead-up to an IPO,” Mark Natkin, founder and managing director of Beijing-based Marbridge Consulting, said. “I don’t want to suggest they are doing things that don’t create additional value, but right now anything that will increase its perceived value is something Alibaba wants to do.”

The group operates, China’s largest consumer-to-consumer e-commerce site, and, a business-to-consumer site with more than 70,000 international and Chinese brands available from more than 50,000 merchants. So far, Alibaba’s main presence in the U.S. has been via its AliExpress business, which connects buyers with wholesalers in China.

The pending launch of 11 Main is the latest in a flurry of activity by the e-commerce giant. In January, the group took a $15 million minority stake in 1stdibs, a New York-based luxury e-commerce site. Last spring, the company bought an 18 percent stake in Sina Corp.’s Weibo, considered China’s answer to Twitter. Last October, it invested $206 million in ShopRunner Inc., a logistics provider in the U.S. Also this month, the company made a bid to acquire AutoNavi, a Chinese mapping software company. Alibaba owns a minority stake in AutoNavi.

Although Matt Nemer, a retail analyst at Wells Fargo, calls the impending launch of 11 Main “interesting,” he is far more intrigued with the hefty investment Alibaba put into ShopRunner — which he likens to a smaller version of Amazon Prime comprised of retailers that opt into a network.

Following Alibaba’s investment in ShopRunner, the site introduced a program with American Express, which boasts a huge base of affluent cardholders who spend a significant amount of money online. American Express is giving out free memberships to ShopRunner’s version of Amazon Prime, which Nemer predicts could drive the membership base up significantly. To him, this move signals more of a “direct attack” on Amazon.

“For Chinese companies, the ultimate goal is how you are going to increase their value,” Natkin said. “To convince investors that you can not only dominate the China market but that you can become a global player. So far, none of the Chinese Internet companies have really succeeded in that. Whether [Alibaba] can become competitive or not is not important right now, and hopefully no one will figure that out until the IPO has already happened.”

Alibaba is facing more competition within China, specifically from WeChat, a mobile application owned by Internet giant Tencent Holdings Ltd. Tencent has linked payment services to WeChat, which has around 600 million users worldwide, to challenge Alibaba’s online payment service, Alipay. Tencent recently launched a promotion to encourage users of Google to import contacts to the application as part of an effort to enter the American market. It is also forging partnerships with shopping malls in China that would allow users to make in-store purchases via WeChat, which is called Weixin in Chinese.

Jasmine Sun, an e-commerce analyst with Smith Street Solutions, a Shanghai-based consultancy, said it is “not surprising” that Alibaba would venture into American e-commerce territory. She said that perhaps the company wants to learn more about the American market and also bring some of its knowledge about the sector in China to the U.S.

“It will benefit their IPO but also show that they know how to follow the rules in America,” Sun said. “There are a lot of concerns that when Chinese companies IPO, they don’t really follow rules. But the IPO may not be the main driver. It will also be a big lesson for them as to whether they can be successful there and learn more about the American market.”

Li Zhi, a chief analyst with the Beijing-based Analysys International Internet research firm, speculates the new U.S. site could be used to give American consumers more access to products from China.

“Though the U.S. is competitive, there is a need for buying Chinese goods. Even if it is not Alibaba, someone will do it,” Li said. “It is a good opportunity to impact and change the layout of the e-commerce market in the U.S. There is space for Alibaba, though it might not be a market leader.”

The fact that Alibaba has a long way to go in terms of becoming a recognized consumer brand will also be a challenge as the company enters the U.S., added Gada.

Amazon is already widely adopted as a household name and consumer brand — it’s a one-stop shop, as well as the biggest search engine in the world for product. While it has acquired properties like Zappos, Shopbop and MyHabit, the Web site still operates as the main portal that these properties roll into and possesses a brand recognition nearly unparalleled to any other e-tailer. Alibaba does not have that recognition.

“An alternative approach [for Alibaba] is that they just stay on as a holding company, and consumers go on to different [online] properties they’ve acquired without knowing what Alibaba is,” Gada speculated. “[But] if they really want to take on Amazon or eBay, Alibaba has to become a recognizable consumer brand.”

Based on recent activities and acquisitions, Gada believes that Alibaba’s approach in the U.S. will be more M&A focused versus one that takes organic growth into account.

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