Amazon vs Alibaba in a New Era of Online Retail

With E-commerce businesses, Amazon and to a larger extent, Alibaba, has built commerce ecosystems that primarily comprise a large number of touchpoints with the consumers.

With the ability to influence consumers, these touch points provide a significant competitive advantage and higher profit opportunity both in terms of core offerings and advertising.

Alibaba has already become the market leader in digital advertising in China, with $12.05 billion in ad sales in 2016. Amazon, on the other hand, is estimated to have generated $1.4 billion in ad revenue in 2016.

With both E-commerce giants moving offline, their appeal to marketers will also increase further. The battle between these ecommerce giants is just beginning, but we can make some predictions about how these two companies may perform individually by looking at the similarities and making comparisons between Amazon and Alibaba.

Amazon started as an online bookstore in the year 1995. Alibaba, on the other hand, had very humble beginnings– it was founded by Jack Ma and 17 other co-founders as a global wholesale marketplace in his apartment.

Both companies focus on helping consumers buy a vast variety of products at low prices without stepping into a store and hence have emerged as major players in their home markets.

Alibaba is not a traditional ecommerce company as it operates an “open marketplace” that easily connects buyers with sellers. As a result, Alibaba appears to be more profitable than Amazon with IPO raised to 25 billion (in 2014) giving it a market value of $231.44 billion. It was also the biggest IPO in the world at the time.

In contrast, Amazon operates a “managed marketplace” that has far greater control over the customer experience and sells majority of products directly. However, the problem is that the company has to make massive investments in terms of infrastructure, employ legions of people and operate on a wafer-thin profit margin.

Both these companies have built up Ecommerce platforms uniquely matching their individual home markets. Alibaba has a great understanding of Chinese consumers and the intricacies of government regulations and how to work within that framework. Amazon, equally, is a master of logistics and supply chain management and is the world leader in cloud infrastructure services.

The digital ad race between these two E-commerce giants is just beginning. Amazon and Alibaba will find it difficult to export their finely tuned business models to each other’s markets.

But it is pretty clear that they are swiftly moving into a new era of retail, wherein online and offline consumer behavioral and transaction data will be captured and analyzed on unified platforms.

Check out the infographic below compiled by Ecommerce-Platforms.com to know more about the growth track of these two companies.

How is winning? Amazon vs. Alibaba

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