Amazon and Alibaba have cracked e-commerce, which means you’ll either be working with or against them on the global e-commerce stage. As such, it’s important to understand their relative strengths and philosophies as they battle to becoming the world’s largest internet retailer. To do this Euromonitor compared the two directly on a number of competitive axes (retail models, financials, logistics, technology, global reach, multichannel, product categories, culture and convenience). Here is a distilled version of key learnings.
Tim Barrett, senior retailing analyst, Euromonitor International
Ultimately, a five-year head start in internet technologies has given Amazon the edge, especially when you consider the fact that this head start occurred in one of the most developed nations in the world. Alibaba has had not only less time to work with, but has had a greater gap to close. Amazon’s speed and success since it began mean it is likely to hold onto its lead.
A big part of this lead is Amazon’s international presence. Amazon makes the most of its 14 country-specific websites, using them to appeal to local shoppers and those in neighboring countries. This web presence alongside strong logistical infrastructure has made it a truly global retailer. However, Alibaba’s cross-border strategy is not without its strengths. Alibaba may appear to be focused on China but this belies Alibaba’s true global potential. If it can turn China into a global manufacturing and consumption hub for which it is the platform for the majority of digital imports and exports, it can hold significant global importance with much less investment as the retail lynchpin of China.
Domestic markets are also extremely important beyond being reliable sources of large amounts of revenue. Determining the future of these companies requires deep knowledge of how they operate in their home markets. Both develop new concepts primarily for their domestic customers. This then informs how these ideas are introduced to additional markets, giving Amazon valuable intelligence about expanding into developed nations and Alibaba more potential insight into developing ones.
While the top two internet giants may have come about in dramatically different markets, they serve many of the same demands. How they service this demand is determined by their differing philosophies. Amazon prefers to concentrate power in its own hands, trusting itself to manage its grand plan, a tactic that has worked well so far. Amazon finds itself more willing to take risk, whether it be in expanding to new countries more often or by investing in expensive technology experiments. Alibaba on the other hand, recognises the power of common alignment, choosing to partner with those in the retail ecosystem. This is a mode of operation that cedes control for more amicable relationships and cost-savings. Alibaba is still willing to experiment, but generally prefers asset-light models and actually making a sizeable profit.
Amazon may have an advantage in a number of categories, but which strengths are the most important? Is its international advantage and logistical know-how enough to compensate for its lack of profits and expensive mixed model? Does Alibaba’s strength in mobile and its strong retail store partners give it the omnichannel edge it needs to expand into regions where the internet is less developed? These are the nuances to ponder (and are explained in greater depth in Euromonitor’s Amazon vs Alibaba: The Fight to be the World’s Largest Internet Retailer report).
With the most important components considered, it seems that Amazon maintains the overall edge moving forward, a fact further compounded by its global lead in business-to-consumer sales, Euromonitor’s main metric. Despite past competition remaining minimal, global expansion will increasingly push these companies into local opposition. India may be the first real frontline of the future, where this hypothesis is about to be tested.
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