Amazon and Alibaba are two giant stores that are conquering the world. On the one hand, Amazon is already a global phenomenon. On the other side, Alibaba is expanding globally. It is interesting to compare the two business models from three standpoints:
- Monetization strategy
- International expansion
- Net margins
Amazon vs. Alibaba: monetization strategy
Both Amazon and Alibaba are born as online stores.
An essential part of the business is still based on the revenues coming from the online store.
Both companies generate most of their revenues (at lower margins) from their e-commerce consumer-facing platform.
It is important to notice how Amazon has been decreasing its dependence on the online stores’ revenues while increasing the revenues from AWS and Amazon Prime services.
Alibaba’s revenues come from services like Cloud, digital media, and entertainment.
Amazon vs. Alibaba: international expansion
As noted in Forbes in 2017, its founder Jack Ma “has spent more than 800 hours flying to dozens of countries, meeting business leaders and head of states to introduce his grand vision: small businesses from all corners of the world trading freely and securely on Alibaba’s platform.“
Both Amazon and Alibaba are investing considerable resources in going global.
As reported in The Economist, Amazon has spent over $5bn in India, while not long after, Alibaba invested $500m into an Indian digital-payments company.
Amazon vs. Alibaba: net income margin
I focused on this metric because it’s interesting to see the difference in margin between Alibaba and Amazon.
As we’ve seen in the Amazon cash conversion cycle, the company can grow aggressively even by keeping a tight margin.
The war between Amazon and Alibaba’s business models is still to be fought.
Read Next: Alibaba Business Model, Amazon Business Model.
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