Amazon.com, Inc. AMZN and Alibaba Group Holdings Ltd BABA are two of the biggest names in e-commerce. While they may seem similar, their approaches, business models, and strategies are quite different.
What Happened: In 2017, during an interview with Andrew Ross Sorkin at Davos, Jack Ma explained the core difference between Amazon and Alibaba.
“Amazon is more like an empire. Everything they should control themselves, by themselves,” Ma said.
Alibaba’s “philosophy is to empower others to sell, empower others to service, make sure the other people are more powerful than us.”
Amazon’s model is asset-heavy. The company controls the entire supply chain, from warehouses to logistics, even owning airplanes for faster deliveries.
Alibaba doesn’t own warehouses or logistics companies. Instead, it relies on a network of partners—small businesses, service providers, and logistics firms.
“Using Internet technology, we can make every company become Amazon,” Ma stated adding that Alibaba empowers its partners so they can compete with bigger players like Microsoft Corporation or IBM.
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Why It’s Important: Amazon makes most of its money through direct product sales, subscription services like Prime, and its cloud computing arm, Amazon Web Services.
Alibaba earns its revenue differently. It charges sellers for advertising, transaction fees, and additional services. Its model leans heavily on enabling transactions rather than direct sales.
Amazon currently has a market capitalization of $2.335 trillion, making it the world’s fifth most valuable company in the world.
In the last quarter, Amazon’s net sales reached $158.9 billion, marking an 11% year-over-year increase and surpassing the Street consensus estimate of $157.2 billion, according to Benzinga Pro.
North American sales rose 9% to $95.5 billion, international sales grew 12% to $35.9 billion, and AWS saw a 19% increase, generating $27.5 billion in revenue.
Alibaba is worth $199.15 billion today. The e-commerce giant posted fiscal second-quarter 2024 revenue of $33.70 billion, reflecting a 5% year-over-year increase and surpassing the analyst consensus estimate of $33.47 billion.
Revenue from the international commerce retail segment increased by 35% year-over-year, reaching $3.65 billion. Meanwhile, the Cloud Intelligence Group recorded a 7% year-over-year growth, bringing in $4.22 billion.
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