Alibaba Vs Amazon: Which one is e-Commerce Leader?

TALLINN, Estonia - Nov. 29, 2017 - PRLog -- The Chinese Giant and the American Colossus find themselves at loggerheads, each determined to drive forward its own vision: a 'pure' marketplace on one hand; 'retailer logic' on the other.

Alibaba is often mistakenly thought of as 'the Chinese Amazon'. It's easy to see how people arrive at this description: after all, the two companies each dominate their respective primary markets. A quick look at the numbers for 2016 shows us that Amazon turned over $136bn, growing 27% on the year before; Alibaba is still much smaller, turning over $23bn – but it's also growing twice as fast, earning 56% more in revenues in 2016 than in 2015. In that year, Amazon had 310m customers to Alibaba's 454m – most of whom are in China.

The Distributor vs The Marketplace

But beyond these figures, the two companies follow notably different business models.

Amazon makes the bulk of its revenue on items from its own inventory. "Amazon buys and resells stock: it's retailer logic", explains Yves Martin, director of analysts Wavestone and a specialist in mass consumption.

And though income from third-party sales via its marketplace are now nudging 50% of Amazon's revenues, it retains close control over these via Fulfilment by Amazon, which allows other sellers using its platform to store stock in its warehouses. "In the fourth quarter of 2016, FBA units represented over 55% of total units sold by third parties", the group announced at the start of this year.

As a retailer, Amazon has really made its mark with things like its Kindle e-reader, which it followed up with a range of tablets and even smartphones. It has a vast fleet of trucks, planes, and boats – to which it will soon add drones. Since last year, Amazon Prime Now, a service offering delivery in as little as an hour from ordering, has been offered in cities from Paris to Singapore (it first appeared in Manhattan in 2014). Meanwhile, Amazon Fresh now offers delivery of fresh produce in several German cities, as well as London and Tokyo.

Of course, pinning your reputation on ever-shorter delivery times means continual investment in infrastructure. Among the big-ticket purchases made by the company this year is a fleet of cargo planes costing around $1.5bn. The company's globe-spanning network of warehouses is also constantly expanding.

All told, Amazon has built a solid reputation not just for speed but also for quality control. But the financial cost of this comes in the form of human resources: Amazon employs a colossal 300,000 people, and plans to grow that by a third in the next year and a half. Alibaba gets by with a comparatively lean workforce of 50,000.

In combining low prices with heavy investment, Jeff Bezos has long constrained his group's profit margin in favour of maximising growth of market share. But by last year there were signs that Amazon could now eat its cake as well as having it, its profits jumping four-fold to $2.4bn. At the start of this year the company announced its eighth consecutive quarter of profitability, driven not just by the e-commerce business for which it's best known, but also by its cloud services division, Amazon Web Services (AWS).

For its part, Alibaba focuses on...Continue reading here: https://roobykon.com/blog/posts/67-alibaba-vs-amazon-a-ba...