Alibaba Buys Vendio Service for eBay, Amazon Online Sellers

Alibaba announced it would acquire Vendio, a service that helps individuals and small businesses sell on eBay, Amazon and on Vendio-hosted storefronts. The Chinese online B2B marketplace will use the acquisition to encourage Vendio's small-medium businesses to source product from China by integrating with the AliExpress.com website.

David Wei, chief executive officer of Alibaba.com, said that in the long term, U.S. merchants would gain access to Chinese retail markets through Alibaba sister company, TaoBao.com, which is a C2C site in China very similar to eBay. "We believe small-medium business should have as many possible channels as they can afford," he said.

How might U.S. merchants be able to sell in China? Wei referred to Alibaba's new partnership with Yahoo Japan in which Yahoo Japan merchants are able to sell directly to Chinese consumers through TaoBao, while TaoBao merchants can sell directly to Japanese consumers.

"I'm not saying we will definitely copy this model into the US, but it's a possible way for sister companies and Alibaba Group can help merchants cross-sell to different countries. We are in early days to look at how we enable U.S. merchants to sell to China." He said Alibaba.com would be able to assess the 80,000 merchants Vendio has today to determine who has the desire and competitive product offering that would be attractive to Chinese consumers. "Maybe some good California wine," he joked.

Terms Not Disclosed
It was rumored that Vendio had been on the market for some time; terms were not disclosed. Wei said, "Two months ago we announced a US$100 million investment for Aliexpress.com. The Vendio investment fits part of the overall $100 million investment, but obviously I haven't overspent my budget yet."

That makes for interesting math, considering that Vendio had raised $37.7 million by 2002 through an angel round and two VC rounds, and in 2006 it acquired Andale, a company founded by Munjal Shah (now of Like.com). Andale had raised over $60 million, according to "The Auction-APP" (McGraw-Hill). In 2007, rival ChannelAdvisor acquired another competitor, MarketWorks, and while industry consolidation was always expected, the value of eBay sellers as customers never came close to meeting expectations of investors and developers.

Insight into Marketplace Data
Vendio's Mike Effle would not reveal what percentage of its sellers' sales (GMV) came through the eBay channel, but said it was fair to say it was over 75%, after a push to expand beyond eBay in April 2009.

Alibaba will gain intelligence into the eBay platform from both a developer standpoint as well as gaining access to seller sales data. Under former CEO Meg Whitman's tenure, Alibaba was considered persona non grata due to its rivalry in China, but Alibaba founder Jack Ma met with eBay CEO John Donahoe last year. If Alibaba can boost sellers' sales through improved product sourcing, it could actually help eBay in the U.S, as Alibaba gives no indication of launching TaoBao or its online payment system in the U.S.market.

Integration Plans
The acquisition gives Alibaba a base in the U.S. in which it can help entrepreneurs set up ecommerce businesses, and continue its educational efforts about international product-sourcing. Alibaba.com will connect AliExpress directly with Vendio through back-end integration, creating an AliExpress tab within the Vendio Platform. The integration allows Vendio users to easily access a private sourcing experience within their Vendio inventory and sales management interfaces. Exclusive guarantees, promotions and special deals on AliExpress wholesale products will also be available to Vendio users.

Vendio sent out an email to its online sellers informing them of the acquisition. Vendio told merchants it would be increasing its investment in the product, engineering, marketing, and production teams. Alibaba is also giving Vendio sellers $100 in coupons for orders on AliExpress. Any customer redeeming the coupons will also be entered into a drawing where the winner will be awarded 2 free years of Vendio service.

Vendio will retain its own brand name and operations and become a new business unit within Alibaba.com. Mike Effle, current Vendio COO, will assume the role of the Vendio CEO and Rodrigo Sales, current Vendio CEO, will become a strategic advisor to the company.

David Wei said Alibaba has over 12 million small-medium business users globally outside of China, over 19% of them based in the United States, making it the largest market for the company outside of mainland China. "By combining Vendio and Alibaba.com, and, in particular, AliExpress.com, we have completed a new value chain, from B2B2C, to consumer. From supplies in Asia to end-user consumers in the States, by creating value to all three parties involved."

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