Alibaba Sells U.S. Subsidiary

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The FINANCIAL — Alibaba Group Holding Ltd. is selling its U.S. subsidiary, 11 Main, to online marketplace OpenSky, after its first major foray into the American online shopping market failed to gain traction, according to Nasdaq.

In a stock-swap deal, Alibaba is taking a 37.6% stake in New York-based OpenSky. While 11 Main’s management will be integrated into OpenSky, 11 Main’s website will remain separate for now, Alibaba said. Financial terms weren’t disclosed.

Alibaba launched the site in June 2014. The company’s U.S. subsidiary has struggled to gain attention and support from Alibaba headquarters in China, according to sources familiar with the matter.

When 11 Main first made its marketplace available on an invitation-only basis, the company said it had a “robust marketing plan” to support growth for shops featured on the site. Still, expectations weren’t high for 11 Main. Analysts described it as Alibaba’s attempt to test the waters in the U.S.

Alibaba, which went public in the U.S. in September in a $25 billion initial public offering, generates the vast majority of its revenue from its Taobao and Tmall online marketplaces in China.

Alibaba senior executives have said the company’s international expansion strategy would focus mainly on helping overseas merchants and brands sell their goods to Chinese consumers. “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 told The Wall Street Journal in a November interview.

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Apart from 11 Main, Alibaba has increased its presence in the U.S. market as an investor. In March, Alibaba invested $200 million in U.S. smartphone messaging application Snapchat Inc.Alibaba’s other U.S. investments have included TangoMe Inc., a maker of video call apps, mobile search provider Quixey Inc. and ride-hailing service Lyft Inc.

 

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