Alibaba.com, a China-based e-commerce company with over 53 million users, is buying Auctiva, which makes tools for small businesses selling on the Internet, as part of a plan to build what its chief executive termed “a global supply chain” for small merchants.
Most of Auctiva’s 170,000 customers are on eBay, and while that relationship will continue, Alibaba wants to use this and other acquisitions to build its business with small merchants in the U.S. and elsewhere.
Neither company would disclose the purchase price. Alibaba said both this and the June acquisition of Vendio, which sold tools for online sales across multiple platforms like eBay and Amazon, is part of a $100 million program designed to give small-sized merchants, particularly those selling discounted and close-out merchandise, a bigger presence on the Internet.
"We still see the value of middlemen,” said David Wei, Alibaba’s chief executive officer. “Wal-Mart can source directly from China. With us, small sellers can compete.”
Alibaba has over 1.5 million sellers, mostly Chinese manufacturers, of which over 120,000 are top-rated larger companies. Many of these companies have excess supplies of goods they need to sell, Wei said, and small sellers can be effective in moving that merchandise, if they get the right terms.
"Last March, we thought about doing it via Amazon, but Amazon and eBay think of themselves as marketplaces, not merchant enablers,” Wei said.
Alibaba has contracted with shipping company UPS to get the small merchants Alibaba’s corporate rates on shipping from China, which as a rule takes about a week. Logistics are still an issue, Wei said, as small-lot purchases cannot yet be consolidated to bring costs down further.
Alibaba plans two work with Auctiva’s data to build a recommendation engine for small businesses, so that merchants can better plan the buying and selling of seasonal offers, related merchandise, and better sourcing.
Auctiva founder Jeff Schlicht said the company would continue to act as a third-party developer for eBay. The company, he said, is currently adding about 10,000 customers a month, most of whom gross between $2000 and $10,000 in monthly sales. Alibaba is likely to also build up Auctiva’s marketing, in an effort to add to that base of sellers, he said.
