Alibaba vs Amazon: The Tug Of War
Alibaba and Amazon both have become bug names in the eCommerce business development. Here is a comparison of how they stand next to each other.
1. Business Mode:
Founder of Alibaba, Jack Ma envisioned Alibaba to be a middleman to serve China’s manufacturing industry and consumers in rest of the world. Alibaba’s businesses are divided into three core segments: Alibaba, Taobao and Tmall.
- Alibaba is a business to business trading marketplace which connects Chinese manufactures to international buyers.
- Taobao (means search for treasure) is largest retail website in china and has a business model similar to amazon and ebay. It is 7th most popular website in the world ranked by alexa.com (Feb, 2019)
- Tmall.com targets China’s growing middle class with branded products such as Nike and Apple. While Taobao helps small merchants, Tmall is attending the need of bigger companies.
- Alibaba has also done other investments in some US startups such as Lyft and snapchat. Its biggest investment is in Sina Weibo, a website similar to twitter.
Amazon’s business model consists of an ecosystem which has many moving parts. Unlike Alibaba (which uses software to exchange goods instead of warehouses), Amazon has largest network of warehouses.
Amazon ecosystem consists of following.
- Amazon.com which is world's largest online retail platform.
- Amazon Kindle which generates revenue by selling digital copies of books on amazon marketplace.
- Amazon prime has already crossed 100 million subscribers and it is a music and video streaming platform. Amazon prime also offers faster shipping with no cost on selected products.
- Amazon has invested in more than 76 startups and companies(Feb,2019) , Aurora being the latest one.
2. Financial Growth and Health
Here’s a table to compare the growth and financial statistics of both the companies.
While Amazon has bigger market cap of $730 billion, Alibaba stands out to be more profitable compared to amazon with operating margin of 28%. Amazon has bigger global presence while Alibaba has better hold to China which is one of the biggest growing economies in the world.
3. Innovation and Consumer Experience
- Amazon has been quick to identify consumer needs and addressing them. For example Amazon Kindle is neatly designed to accommodate millions of books and mimicking experience of an actual book , Amazon Echo is a smart speaker with a voice assistant named Alexa, Amazon prime has already crossed 100 million subscribers only in US etc. Amazon is also using AI and machine learning to make its warehouses and shipping network fast and low on cost.
- Alibaba has world’s fastest cloud streaming platform which has been proven to handle 10 million orders per minute in a single day. Even with exploding number of orders Alibaba’s servers successfully offered highly personalized experience and remarkable customer service. These servers can store 1000 petabytes of data.
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