There are no doubts that both Alibaba and Amazon are the
lucky ones of the Internet age first movers of them respective market in nearly
twenty years both have grown to have become one of the greatest companies of
our age Alibaba is always misunderstood to be the Amazon of China the real the story, however, is not this simple it's not that simple at all so let's break it
down Amazon versus Alibaba this story is going to be towed in three chapters. Chapter
1 is called a brief history as Alibaba and Amazon where I talk about the
history of both companies. in the 2nd chapter, I would break down the
strengths and weaknesses of each company so that we know what they are better. At
lastly in the final chapter let's talk about their ongoing war.
Chapter 1 a brief history of those companies
Amazon was established on July 5th, 1994 by Jeff Basil's it
is the largest internet-based retailer in the world by total sales and market
capitalization started out as an online bookstore and sewed books DVDs and CDs
later it diversified into selling various products in multiple industries
Amazon fresh is its most recent effort to venture into the grocery market it
also is the largest infrastructure as a service provider in the world with Amazon
Web Services you know there's a video made by cold fusion I'll put the link
down below it's about Amazon and he made a better case for Amazon than I should well check it out let's get back to my article. as for Alibaba, it is
established in the year 1999 started out as a b2b portal that connects Chinese
manufacturers to oversee buyers it quickly diversified into TOCOM which is a
c2c platform famous for its large amount of small businesses on board and team
all calm which is the b2c branch of Alibaba in this case Taba is similar to
eBay and Timo is like Amazon or regardless in less than 20 years Alibaba has
dominated the Chinese market with 80 percent market share and in that income
much higher than that of eleven billion in 2016 compared to merely two billion
from Amazon to date the sales revenue of Alibaba is more than Walmart Amazon
and eBay combined
Chapter 2 the core competency comparison
firstly, Alibaba controls the Chinese payment system founded
in 2004 Ali pay is the biggest third-party payment platform in China and the world it provides escrow services in which consumers can verify whether they're
happy with the goods they have bought before releasing the money to sell its accounts
for half of the Chinese non-bank online payment market for those uninformed out
there nowadays with the Adi pay app, you can simply scan a QR code to pay for
anything anywhere including food transportation shopping bills and many more just
recently a lipe launched its credit card like function called Hua bay this is
also, why the cart payment market has been stagnating in China but as far as Alibaba
is concerned a lipe makes it the largest mobile and online payment platform in
the world the second strength of Alibaba is its huge amount of consumer data
and due to the nature of the data, it is very valuable to the brand you might ask
this is the same for Amazon's right well yes and no yes they are both consumer
online shopping data and know the data from Alibaba is more protected ever
since 2005 Alibaba has stopped by do the search engine of China from indexing
its web pages making Alibaba, not just an online shopping center but also a
giant search engine until now advertisement and store rankings is still one of
the biggest portions of Alibaba’s earnings lastly Alibaba is also backed by the
731 million Chinese Internet users and the Chinese government in 2015 ad pay is
forced to restructure to push out foreign control from Softbank making Jack Ma
the biggest shareholder in an online shopping platform and the search engine it
is absolutely advantageous to have been located in China because what 731
million Internet users bring is not just money they also contribute to Alibaba
and in No amount of data, these data consists of user behaviors across various
sectors shopping statistics preferences of food clothes transportation utility
bills movie tickets and so on in the next two decades artificial intelligence
is going to be a big focus for all companies and one of the most important
factor to making artificial intelligence smart is to Train it with a large amount
of data the more data available the more accurate is the AI hence the large consumer
base in China is a significant advantage for Alibaba so after saying so much
about Alibaba
The last Chapter strength of both giants
Amazon has a different business model but? Alibaba is a
marketplace for products Amazon is more O'War marks like online retailer buying
things from suppliers and selling them online because of that Amazon has much
better supply chain logistics than Alibaba its delivery service is no less than
excellence whereas Alibaba doesn't know any logistic services at all well
Amazon can deliver anything to your front door in two days Alibaba can't make
that promises because they don't have any control over its delivery this is
kind of a double-edged sword for Amazon on one hand this makes amazon's
delivery experience very pleasant but on the other hand this also creates huge
amount of overheads making amazon's operation very expensive and cumbersome
this is the primary reason why admins do not make money for a long time even
until 2014 they are still making a loss as shown in their annual report if you
look into the details of their annual report in 2016 you would find that its
international business it's not making any money even until this day this also
brings me to my second point looking deeper into Amazon's 2016 annual report
one thing becomes pretty clear to me Amazon is and will put a lot of emphasis on
the Amazon Web Services although Amazon sales in North America amounts to around
80 billion dollars in 2016 Amazon is only making about 2.3 billion dollars from
that because of the large number of overheads for logistics and inventory on
the contrary with the net sales of 12 billion dollars in Amazon Web Services
they can earn three billion dollars in income after deducting the Opera
meeting expenses well Amazon made a loss of four hundred and seventy-seven million
dollars in its international sales Amazon Web Services is now more than 60% of
Amazon's annual income hence from an income perspective Amazon is now officially
a service provider providing server infrastructure rather than an online
retailer this is the part that differentiates Amazon from Alibaba and because
this business is b2bit is much more stable and lucrative lastly although
Amazon is making a loss in its international sales it could potentially bring
many benefits to Amazon in the future one prominent example is India besides
to 3 billion investment routed to India Amazon also spend hundreds of millions
of dollars in India in the past years to counter the fierce competition furthermore,
comparing Alibaba which has over ninety percent of its business in China Amazon
is much more diverse and reaches broader regions this makes Amazon more
prepared in terms of international competition finally now that we understand
the strengths and weaknesses of Alibaba and Amazon this time this to talk about
the competition between the two companies first of all both of them have strong
foothold in the respective markets Alibaba takes 80 percent of Chinese online
shopping market making it an absolute monopoly in China well Amazon's 43
percent market share also makes its business very lucrative in America as both
markets saturated with competitors from different segments it is very hard for
any one of them to fight on each other's homeland hence their better ground is
elsewhere the most chased after the lens of opportunity are India and the Southeast
Asia both contain populations in the magnitudes of billions yet both do not
have dominant forces in the local market, therefore, enters Amazon and Alibaba losing
the Chinese market in the early 2000s is perhaps the worst thing that has
happened to Amazon although the fight in China is already a missed opportunity
Amazon is not going to let the same thing happen a second time five billion
investment in India shows its conviction in the past three years Amazon has
grown to a formidable size is due to India's regulations Amazon operates only a
marketplace in India selling goods through third-party vendors but it handles
the technology infrastructure and most of its vendors' deliveries as explained
in Chapter two Amazon's delivery system is definitely one of its advantages and
this movie plays to its strengths however I Baba is determined to put out a
great fight its strategy is vastly different instead of building in Alibaba
India like Amazon India it invests in local companies and let the Indians work
on their own five hundred million dollars investment in the snapdeal shows its
strong conviction furthermore Alibaba is also playing to its strengths instead
of doubling down on online shopping it is trying to take over the eat payment
market by acquiring pay p.m. the biggest India's online payment platform this
obviously utilizes call strength which is online payment furthermore in the
past few months there have been talks about a merger between pay p.m. and
Snapdeal making Alibaba finally a worthy opponent on the land of India one An additional wildcard that's worth mentioning is the Chinese mobile dominance in
India India is a top priority for Chinese mobile brands like Xiaomi and Opel
together Chinese mobile brands take up more than 40 percent of Indians mobile
market according to research done by IDC this potentially brings trouble for
Amazon India's dominance as those friends have a strong strategic alliance with
Ali Baba while the fight in India is developing the competition in Southeast
Asia seems to be simmering much less intense the presence of Amazon seems to be
non-existent the rumor has it that Amazon is going to build its delivery infrastructure
again in Indonesia meanwhile Alibaba obviously is determined not to lose this
wall in its backyard 1 billion investment in Canada and investment in the red mart
are Ali Baba's move local investors back to see and JD's recent consideration
adds more turmoil to the massive situation in the region to FOIA information
lazada is one of the biggest online shopping sites in Southeast Asia based in
Singapore red mart is one of the first grocery shopping sites in southeast Asia
sea formerly known as Garena owns a shop which is the top mobile shopping of in
Southeast Asia well I'm gonna give it Amazon I think although Alibaba does
have a huge advantage in terms of the market potential as well as the future
outlook but the thing for Amazon is that its business is more diverse not just
geographically but it's indifferent verticals for example Amazon Web Services
it's a great movement it consists of 60% of Amazon's 60% of Tammuz owns
businesses and because of this it makes Amazon's business much more risk
resistant and for that reason I'm going to give it to Amazon so that the world
not trying to 0 that's it
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