It’s time to set eyes on the battleground since this e-commerce war is worth witnessing.
Amazon and the Alibaba Group are battling against each other to win the crown for the leader of the global e-commerce market.
Amazon laid the cornerstone in 1995 as an online bookstore whereas Alibaba came in 1999, nearly five years after Amazon’s founding. Now that both the companies have established a strong brand presence in their home territories and internationally, there is a tough rivalry between these two tech giants as they are looking forward to crossing borders and expanding markets.
Working Business Models
Even though the mode of operation of both companies looks similar at first glance, they are quite different. Amazon operates under a business model with many moving parts. The company sells goods like electronic products, merchandise and digital media content (including Amazon Prime, an annual fee-based subscription that streams video content and other trending digital services). A range of products are offered to buyers through Amazon’s online storefront with a small markup, and inventory is kept in the company’s large network of warehouses. Most consumers visit the company’s site assuming its products are less expensive and readily available for purchase and shipping.
On the other hand, Alibaba operates on a number of e-commerce sites aimed at different types of sellers. Alibaba’s Taobao is one of Alibaba group’s most profitable marketplaces and is responsible for more than 80% of Alibaba’s sales. Taobao is a B2C (Business to Customer) platform which has been slowly and steadily increasing its footprint in China, curating a portfolio of investments to grab a slice of the e-commerce market. Taobao offers a large variety of products and bumper deals that are available to the customers at highly attractive prices. Even though there is no English version Taobao website currently available and international shipping service is not provided by Taobao stores, still Taobao is nominated as a good choice by consumers for buying small amounts products. Alibaba originally provides a business trading platform for engagement between suppliers and buyers. Most of the members are manufacturers, trading companies or re-sellers who trade in large quantity order. Today it is towering on the spending power of Chinese farmers, labourers and white-collar workers and casting its eyes overseas with investments in Hollywood movies, a soccer team and news media. It has been setting its foot in India and according to Forbes, Alibaba’s increased interest in India does not come as a surprise since the Chinese market has already reached its pinnacle.
Amid a rash of retail bankruptcies and store closings, online giants Amazon and Alibaba are continuing to swiftly gain ground. According to Forbes, Amazon is now the world’s third-largest retailer and ranks No. 83rd on Forbes’ Global 2000 list of the world’s biggest and most powerful public companies, as measured by a composite score of revenues, profits, assets and market value. Amazon has been probing into areas like fashion, where it has rolled out private labels, snapped up online retailers and introduced the Echo Look that can take full-length photographs and suggest different outfits. It has doubled down on online groceries and is also now reportedly planning of getting into the pharmacy business.
Talking about the international rankings of Alibaba, it is placed at the 140th position, not far behind in the sixth place. Even though there is a major difference between the rankings but Alibaba’s investments and partnerships with companies like SoftBank, Flipkart, Paytm and BigBasket show that it has huge plans for the future.
Vinod Murali, managing partner at Alteria Capital, a venture debt firm told Forbes, “There have been lots of discussions, but clearly, there is no urgency in finishing things. This is not a short-term or even a medium-term play for them [Alibaba], but a very long-term strategy. It looks like they would rather take time and enter into really strong partnerships meant for the long-term, rather than do trial and error,”