Alibaba vs Amazon – Amazon is currently the leader in the e-commerce space, and Alibaba is its greatest competitor. However, if the online shopping sector was a boxing ring, which of the two champions would prevail over the other?
Let’s find it out by taking a glance at the differences between the two in the upcoming paragraphs.
Differences between Alibaba and Amazon
History:
- Amazon vs. eBay vs. Alibaba
- Amazon Product Research – Are You Consuming Your Time Wisely?
- A Friend Won and Lost By Alibaba in Washington
Alibaba vs Amazon – Many of you must be aware of Amazon’s history, where Jeff Bezos in mid-90s began to sell books exclusively to his online customers. With a successful launch and progress to date, Amazon has become the largest online retailer in North America.
On the other hand, Jack Ma in China founded Alibaba in 1999 with very like business or technological know-how, his drive and ambition has seen his company scale in ways many entrepreneurs can only dream about. Alibaba is now on the map and booming in the Chinese market.
Business models:
Alibaba dominates the Chinese consumer retail market and has a B2B portal that connects Chinese factories, businesses, and facilitates e-commerce within China.
On the contrary, Amazon is a re-seller, who takes up ownership of inventory and the chain of merchandize and connect sellers and buyers. Amazon also offers thousands of products that you can buy from third-party businesses.
Philosophy speaks for both:
Amazon believes in attracting more traffic and delivering the best products and services to it’s customers. It aims to build itself as the most significant customer-centric company in the world. With Amazon prime, the company has taken the initiative to improve all of its services starting from ordering, pricing, delivery, to customer support. We can say Amazon’s services are quite impressive especially taking into consideration the deals they advertise which assists to attract more customers to the site.
Jack Ma’s Alibaba philosophy has a different approach and focus. The company aims at helping small businesses by employing problem-solving techniques through internet technology. China is a secular country, and the laws are quite different compared to those in other countries, especially the United States. China has always encouraged small businesses, therefore, Alibaba’s main focus is looking after the small guys and providing them with a platform for growth.
Geographic approach:
As we have already discussed, the main focus of Alibaba is making money through operations within China; it does not expand geographically. The company operates 84 percent within China and renders it’s international services at only 16 percent. Therefore, the geographical approach of the company is quite limited, but is still extremely profitable nonetheless.
On the other hand, Amazon has spread its wings all across the globe, contributing to 40 percent of the Chinese market and 60 percent internationally. Amazon has a sizeable geographical approach allowing its business to operate in almost every country.
Timing:
Whenever you buy through Alibaba, you are asking a company to produce goods. Consequently, you need to calculate both production and shipping time as well as customs.
However, when you buy products on Amazon, the goods are ready, and within a few hours, they are shipped by courier service to the recipient with significantly shorter delivery times.
Quantity:
All suppliers on Alibaba sell wholesale goods and ask for a rather high MOQ (minimum order quantity). These companies don’t have the products in their warehouse, but they will ensure availability following your order.
On the contrary, at Amazon, you can buy post-finished products, and consequently, buy them in super small quantities. The company makes sure you get what you desire with the availability of different options like brands, prices and quantities.
The difference, according to the Chinese market:
According to Andrew Youderian from eCommerceFuel, Alibaba “accounts for 80 percent of all online purchases in China.” The business model of Alibaba closely relates to eBay’s model, which is certainly an accomplishment. As the company has more share in the Chinese market, the demand for products all across China is relatively high. In China, Alibaba is known as the ‘Amazon of China,’ as it renders the best services within the country.
Amazon, on the other hand, has a different story, by gaining the crown of the largest retailer in the world, Amazon has been able to uphold over 100 million Amazon Prime users as of 2019. Amazon has the most effective business model and mode of operation that enables the company to render the best services around the globe.
Services:
Some surveys reveal that Alibaba reported it’s gross merchandise volume to be $250 billion. This large transaction facilitated through the platform was extraordinarily high to many of it’s competitiors.
The figures for Amazon however stood at $61 billion, which was significantly lower than the values reported by Alibaba. However, the company claims that the numbers are misleading as they do not count any 3rd party merchandise sales. The sales that matter to Amazon are the sales that they conduct directly with their customers.
Growth:
With the ongoing crisis due to the Coronavirus pandemic, online shopping is increasing on a large scale. Initially, the companies such as Alibaba and Amazon thought they would suffer due to the lockdown restrictions; however, figures suggest the exact opposite, due to more people spending more time online.
Revenue:
Amazon generates revenue from core business that includes physical stores, online sites, subscription services, third-party seller services, marketing products, and advertising. Jeff wants all of his customers and retailers to know about Amazon so that it is convenient for them to connect quickly in a cost-effective manner.
The story for Alibaba’s revenue includes innovative initiatives, core commerce, entertainment, and digital media. The best thing you will come across in Alibaba’s business model is it’s effective warehouse software which enables the company to manage its stock efficiently.
Globalization:
Jeff uses the best technology that is available in the market as compared to Ma. However, some believe that the technology Amazon uses is more disruptive than the one Alibaba employs as it has a way of pushing the boundaries for globalization, making the world one size fits all, instead of taking into account the importance of cultural diversity.
Sales:
Amazon makes almost 50% of its sales through its Amazon Resellers marketplace. Sellers can store products in Amazon warehouses to manage inventory, shipments, deliveries, and returns.
Alibaba is an intermediary who does not control the storage of goods, the procurement, and the shipment of the products.
Price:
You all might know that the costs of an item change considerably based on quantity and quality. Consequently, there are no fixed prices on Alibaba because it depends on the number of products requested, the technical characteristics required, the production and shipping time.
On Amazon, you will have products with a fixed price, usually higher than what you could get on Alibaba because you lose the advantage of wholesale.
Conclusively, there is fierce competition amongst the two companies, and we cannot determine who will win the game, nevertheless, it’s great to see how innovative both Amazon and Alibaba are in the global marketplace.
