The two bohemians, Amazon (founded in 1995) and Alibaba (founded in 1999), of eCommerce have been in the hot headlines for years. Who is the winner of the crown of the global e-commerce market and which one should a seller choose to grow their business on a digital platform?
They both ruled in their home territories, now looking to expand their influence to the world. But it’s not a straight apples-to-apples comparison between two giants. They have many common features but they are quite different in their target audience, seller market, and revenue. Where Amazon makes a profit from electronic products revenue, merchandise, digital media content, and other trading services. Alibaba strived at different types of eCommerce sellers and merchants.
Unlike Amazon, Alibaba is a marketplace that neither has any warehouse or inventory nor they deal with direct sales. Alibaba is a B2B portal for connecting the western market with Chinese manufacturers. Where most business-to-business deals and transactions happened and barely connected buyers and sellers. On the other side, Amazon is like a traditional retail store that works online, owns the supply chain, and sells direct products. Amazon is like a mall where it exercises control over seller shops in that mall.
Alibaba is the giant of China, where it enjoys the ride it’s also encountering difficulties to adapt to new eCommerce and world economy. Amazon also understands that it can’t win in China so they divert the focus and investment into other prominent regimes.
Where everyone wants a good showdown by creating an Amazon and Alibaba faceoff, are they really each other’s competitors? Let’s look at the core of these platforms a bit more closely.
Amazon’s vs Alibaba’s Business Models: An overview
The competition between them can be described as a war between “Warehouse vs Software”. There is a huge margin between their revenue. Alibaba runs a business with less overhead compared to Amazon. Where Amazon’s PE increased around 70% in 2018 to 100% now. Alibaba’s PE is the same 50% as it was in 2018.
Amazon stock price, from 2015-2019, has grown at 1.1× to the Alibaba rate.
- Amazon represented a change of 173% that at the end of 2015 was $676 to go up to $1,848 in 2019.
- Alibaba represented a change of 162% during the same period, rising from $81 to $212.
This overview is clear in terms, let’s dive deep into the nitty-gritty and what makes them different from each other. So you can choose the best for your business.
Similarities Between Amazon and Alibaba
They are the same in some of their roles, such as:
- Both Amazon and Alibaba, e-commerce platforms operating primarily without physical stores.
- Where Amazon is the biggest American shopping domain, Alibaba serves the same purpose in China.
- Amazon not only sells products directly to customers but also serves as an intermediary or retailer for other sellers, making a profit out of the sale. Alibaba charges vendors and merchants tariffs to come up higher on search rankings
Differences between Amazon and Alibaba
One of the biggest differences between the two markets is their target audience. Amazon deals directly with consumers for both new and used items, while Alibaba is a mediator between buyers and sellers.
Amazon allows sellers and buyers to connect on the platform. That’s not mean that Alibaba doesn’t offer an Amazon-style platform for both sellers and customers. Alibaba owns both AliExpress and Taobao, and the latter, in specific, is their massive and most profitable site. With almost 7 million active sellers supplying items on the fee-free marketplace the best thing is buyers or sellers not having to pay charges, and this platform endorses more than three-quarters of Alibaba’s sales.
As already mentioned Alibaba’s business model is primarily B2B, while Amazon’s is dealt into the B2C module.
The key difference between both platforms is pricing which sets them apart. you’ll notice the main differences between the two marketplaces and why they are not a threat to each other. As we all know Amazon has a different payment and fee structure where they charge a specific amount to sellers, whether it’s the monthly professional seller plan, Amazon seller fees, Prime memberships, or any other means.
Alibaba, on the other side, doesn’t have such charging fees, as seen by their fee-free Taobao zone. It allows free experience to sellers by only generating revenue from those sellers who want to rank higher on their internal search engine. But where Amazon doesn’t charge sellers for this. Sellers can leverage the SEO and metrics of Amazon to rank in search results.
Last but the most important difference between the two e-commerce giants: the streams of revenue of each company.
Amazon has a variety of online and offline stores. And the majority of their profit streams come from high-end brands, individual seller accounts, subscription services, and advertising. Streaming service is another domain where Amazon is trying to get its footing.
Compared to Amazon, Alibaba is also trying to establish its authority and continuously creating the powerful stream from Taobao Alibaba 80%sales come from it. But that is not a major source of revenue.
To conclude the talk Alibaba is not yet Amazon. Amazon remains at the top of the hierarchy as the most dominant retailer. And it’s not going to lose its place anytime soon. Where Alibaba is giving a tough challenge to Amazon, Amazon has a promising track record to expand internationally.
If you are beginner, you can get services from experts for assistance in Amazon Product Launch which is always a better option.