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Alibaba: The Amazon Killer? (article)

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~Dr Juice~

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Alibaba: The Amazon Killer?
By Matt Weik, May 31st, 2019




How many of you have heard of Amazon? Probably every single one of you. Heck, you have probably ordered something from them in the last 30 days. Now, how many of you have ever heard of Alibaba? Maybe only a few of you. The Alibaba Group is a Chinese e-commerce platform that is direct competition with Amazon. While both e-commerce businesses are showing year-over-year growth, Alibaba is nipping at Amazon’s heels.

When looking at both businesses, it’s a battle between Amazon owner, Jeff Bezos, and Alibaba owner, Jack Ma. Both basically have more money than God at this point but in a market where everyone is looking for the next big thing, will Amazon stay on top or will Jack and his team push full steam ahead in 2019 and close the gap between the online giants?


Brand Expansion
Both Amazon and Alibaba have multiple services or brands under their umbrella. Obviously, we all know some of Amazon’s such as Amazon Prime, Amazon Fire, Amazon Kindle, Amazon Drive, and others. Alibaba also has various brands such as Ant Financial, AliPay, Alibaba Cloud, 1688.com, AliExpress and more.

If you would take both businesses and put them on top of each other, they would almost fit identically. Yet, the opportunity for Alibaba to grow quickly exists simply by the numbers. China has around 731 million internet users while the US only has around 286 million.


Customer Shopping
Here in the US, we look forward to Amazon Prime Day. It’s a day where powerhouse Amazon has a huge sale on nearly their entire site it seems. People flock to the internet to see what deals are up and how much money they can save. It’s similar to a Black Friday or Cyber Monday event (which we will discuss shortly). The sales from this “shopping holiday” in 2018 was $4.19 billion for Amazon. Not bad, right? I mean, heck, any business who does $4.19 billion in sales in such a short period has nothing to complain about.

But wait… Alibaba has their own one-day sale in China called “Singles Day.” In that one day, they did $30.8 billion in sales. No, that’s not a mistake or typo. Can you say complete and udder annihilation in sales? There’s no comparison. If your jaw didn’t hit the floor, this probably will. Looking at the 2017 statistics for Black Friday and Cyber Monday sales in the US, the numbers only reached $10.6 billion (I didn’t have the 2018 figures at the time of writing this article). Add that to Prime Day and you’re still only at $14.25 billion. Alibaba is straight up a beast.


By the Numbers
Groups have been looking at the trends of both Amazon and Alibaba and they say that for every $10 spent online, $5 is going to Amazon. This is almost a monopoly. Amazon’s hold on the US consumers is intense and it’s only growing with each passing year.

When looking at Alibaba, they have more than 80% of every purchase made online in China. Yet, it is said they still have a lot of room to grow as they have only hit around 53% internet penetration.

In 2018, Alibaba joined other gorillas in the market like Microsoft and Apple by reaching a market capitalization of more than $500 billion.

While Amazon is still, overall, larger than Alibaba, there should be concern on the face of Jeff Bezos that Jack Ma has a target on his back. Can Alibaba steal sales from Amazon in the US? I’m not an analyst nor do I have a crystal ball, but I think it’s going to be hard for American’s to change their ways and habits and shift from one e-commerce retailer to another, especially when they have been with Amazon for so long and believe in the brand.

With Amazon having multiple brands and American’s using them every day, it creates another layer of security for their business in the long-term (assuming they don’t screw something up). Consumer’s flock to Amazon not only to make purchases but to price-check items found in retail locations to see if it’s a good deal or not. Now, if one group should be threatened by Amazon and Alibaba, it should be the brick and mortar retailers.

As we’ve seen in our own cities and towns, businesses (especially small businesses) are closing left and right. They simply cannot compete with online and their foot-traffic overall has gone down due to American’s changing their buying behaviors by having the ability to order something online without ever needing to leave their house, fight traffic, find an item in the store, wait in line to check out, and then drive back home. When you can purchase online and get free shipping and free returns, it’s extremely difficult to fight that uphill battle.


What’s the Verdict?
Can Alibaba kill Amazon? I think many others will be squeezed out before Amazon, but I don’t see Amazon going anywhere. Bezos said himself that Amazon doesn’t have immunity from going out of business. He understands he has a target on his back by not only Alibaba but many others. It’s a matter of if Amazon can continue to innovate and create positive customer experiences to keep the everyone happy. But I don’t think it’s out of the question that in another decade Amazon could be overtaken in sales dollars by someone like Alibaba. Only time will tell.
 

durk

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The biggest disadvantage China has is their idea of customer service. I do a lot of LEGITIMATE business with Chinese vendors. I have to switch often. As soon as things start going well for a while they try and rip you off in some way, take back an originally agreed upon deal, give you something other than what you paid for, or who knows maybe they made an honest mistake.

The response is always the same. They berate you like you are some kind of idiot when you call them out and tell you they are done doing business with you.

If any other country could even come close to matching their prices I would never deal with China again.

If they treat people buying perfectly legal stuff like this. I could only imagine the headache a ug lab goes through.
 

asashouryu

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Funny
I don't trust anything Chinese. I'm an amazon addict :)
funny that - since basically 99.9% of stuff on amazon is made in China or even worse direct/drop shipped right from China anyway there’s basically no getting away from if no matter where you shop anyway!
 
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~Dr Juice~

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Funny

funny that - since basically 99.9% of stuff on amazon is made in China or even worse direct/drop shipped right from China anyway there’s basically no getting away from if no matter where you shop anyway!
-- It's kind of ironic this article came across my desk yesterday because as I was out for my daily walk a few days I was thinking about the exact same thing you mention; virtually all this shit sold online originates primarily from China! They're the world's manufacturer. So, if virtually everything is manufactured in China then they enjoy a HUGE advantage globally. Basically American vendors are drop shippers for Chinese sources, lol. No wonder Amazon desperately needs to solve the shipping cost problem in order to stay not only 1-step ahead of the Chinese but just to keep pace with them!

So with regard to shipping -- The only thing that saves Amazon with my own personal perspective is the shipping time. How many times do you scan through items and see the same identical product available from multiple vendors? Almost always right. However, unless that product is coming from North America, or in some cases Europe, I ain't ordering it. Who wants to wait 1 month or more for their bauble to arrive from China or South East Asia when I can have it in days or a couple weeks at most!

Having said all that I rarely shop online (maybe 4-5 times per year) and instead stick to local shopping. If there is something I'm needing online it's typically something that I just cannot track down locally and need to resort to the internet. And almost every time I do it's typically from a standalone business and not Amazon, Alibaba, or Ebay.

The next few years should be interesting to see unfold. I see Alibaba eventually becoming the global leader in almost everything related to shopping online and Amazon instead begin developing their other ventures more aggressively. But who knows, I've been wrong before :sneaky:
 
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NG_F

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This article is a one sided presentation. They talk about the U.S market only but sneakingly don't mention that Amazon has services globally.
Amazon.ca- which is really growing in the last year as far as selection and competitive prices even with trump constantly killing our dollar !

Alibaba will never catch Amazon as Amazon.com is primarily a retail site with a sales revenue model; Amazon takes a small percentage of the sale price of each item that is sold through its website while also allowing companies to advertise their products by paying to be listed as featured products. As of 2018, Amazon.com is ranked 8th on the Fortune 500 rankings of the largest United States corporations by total revenue.
Bezo's has amassed his billions through market shares and NOT so much with profit/mark-up on each item.



There is also : Amazon globally.png

Amazon acquired Whole Foods Market for $13.4 billion, which vastly increased Amazon's presence as a brick-and-mortar retailer. In 2018, Jeff Bezos announced that its two-day delivery service, Amazon Prime, had surpassed 100 million subscribers worldwide .

As Dr.Juice expressed his great satisfaction regarding the shipping services, This is definitely one of my favorite features as well aka " In a Pinch" lol. In November 2013, Amazon announced a partnership with the United States Postal Service to begin delivering orders on Sundays. The service, included in Amazon's standard shipping rates, initiated in metropolitan areas of Los Angeles and New York because of the high-volume and inability to deliver in a timely way, with plans to expand into Dallas, Houston, New Orleans and Phoenix by 2014.


It is my own experience that Amazon.ca or WE have had this service as well since 2018 in selected areas!!
Then again you always get ignorant haters ~ "In early 2018, President Donald Trump repeatedly criticized Amazon's use of the United States Postal Service and its prices for the delivery of packages, stating, "I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy," Trump tweeted. "Amazon should pay these costs (plus) and not have them bourne [sic] by the American Taxpayer." Amazon's shares fell by 6 percent as a result of Trump's comments. Shepard Smith of Fox News ( Don't bomb me here ! LOL) disputed Trump's claims and pointed to evidence that the USPS was offering below-market prices to all customers with no advantage to Amazon.

" I am Right" ......" I am Right!" Who talks like that ? :censored::alien: :sick:

I think as a kind gesture Amazon should attempt to acquire Twitter :censored::LOL: What do you guys think ??
 

zenmonky

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The biggest disadvantage China has is their idea of customer service. I do a lot of LEGITIMATE business with Chinese vendors. I have to switch often. As soon as things start going well for a while they try and rip you off in some way, take back an originally agreed upon deal, give you something other than what you paid for, or who knows maybe they made an honest mistake.

The response is always the same. They berate you like you are some kind of idiot when you call them out and tell you they are done doing business with you.

If any other country could even come close to matching their prices I would never deal with China again.

If they treat people buying perfectly legal stuff like this. I could only imagine the headache a ug lab goes through.
spot on. something culturally about china doesnt allow them to see the bigger picture concepts of capitalism like reputation, branding, win/win, customer loyality. there are scores of book on capitalism and so many chinese even in the best business schools in the world and they still cant figure this out. i think its the legacy of communist dictatorships, those systems have no feedback or self awareness that our systems have because we value criticism and free speech.


i think aliexpress is the consumer arm that would be targeted toward us. they dont have a chance. i do buy stuff from them but it is the cheapest knockoff garbage. another lesson china just cant learn, racing to the bottom isnt being competitive.
 

gramkind

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Aliexpress is ok if you don't mind waiting 2 months for something to arrive. Clothing is sized bad there too. After getting a few items that were at best kids sizes I ordered something 5xl and it was still too small. I usually wear an xl.
 

Grimlid

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Prime's free shipping and carte blanche returns policy is unbeatable in my opinion. The return policy alone makes me feel at ease when ordering almost anything from Amazon.
AliBaba always feels a bit risky both for product quality and reputability of products.
Cant see North Americans moving that direction too quickly.
 
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