Alibaba vs Amazon Difference
As e-commerce becomes ever more competitive, the biggest companies have been founded, have grown and have suddenly found themselves on the brink of direct competition with one another. Here’s a Alibaba vs Amazon difference comparison:
Amazon founded in 1995, was a star of the first dot-com boom, and its model is based on its B2C online marketplace. On Amazon, you’ll find thousands of products you can buy directly from 3rd party businesses. But Amazon is also in the business of stocking items and selling products directly to consumers. Amazon CEO Jeff Bezos’ long-standing goal is to build the world’s most customer centric company. And it’s hard to argue with his progress. Despite their size, Amazon’s customer service – in terms of pricing, delivery and customer support – is impressive.
Alibaba is a business-to-business (B2B) marketplace that connects businesses to Chinese factories. If a manufacturer wants to produce a new product, they can search on Alibaba for a suitable Chinese factory partner who will create their item, send a prototype, and then approve a large wholesale order. Alibaba’s philosophy can be explained through this quote from their IPO prospectus-
“Our proposition is simple: we want to help small businesses grow by solving their problems through Internet technology. We fight for the little guy. Since our founding in 1999, we have helped millions of small businesses to achieve a brighter future.”
In terms of performance, it is important to remember the differences between the platforms offered by Alibaba vs. Amazon.
Alibaba vs Amazon Revenue 2016
In the last fiscal year (2016), Alibaba had revenues of $14.4 billion, with profits of $10.5 billion. After opening with the biggest IPO in the American history, the market capitalization of Alibaba currently stands at $193 billion.
While still less than Amazon, Alibaba employs 35,000 workers and is looking to expand dramatically into the global market. But the stock performance has dragged, with a -5% drop in the past calendar year.
Alibaba vs Amazon Market Cap
Alibaba Vs Amazon Which is Bigger?
Amazon has a $329 billion market cap and $113.4 billion revenue. Now, one might think that Amazon e-commerce dwarfs Alibaba, so there is no competition. But despite the gap in revenue over Alibaba, the Amazon empire only turned a profit of $1.2 billion, which is only about a tenth of what Alibaba does on much lower revenue.
Amazon does not focus on profitability; instead it focuses on providing the best experience to its customers. Jeff Bezos and his 2,31,000 employees have played well on this strategy, as Amazon’s stock is up by 59% in the past year (2016).
But, why does Amazon have lower profits even with such high revenues? The difference can be best explained in phase- warehouse v/s software.
Alibaba doesn’t sell products themselves. Instead, they simply offer a web platform that facilitates the exchange of goods. They’re the world’s largest e-commerce company, but they’re actually much more like a software company than a retailer.
Amazon, by contrast, is in the business of selling directly to consumers – and has to deal with all of the logistically complex and expensive physical aspects that go along with it. Namely, building out a vast warehouse network.
What do you think about Alibaba vs Amazon Difference? Let us know in the comments below.
By- Palak Agarwal