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Difference Between Amazon and Alibaba

The advancement in technology has seen the growth of not just one, but many sectors in the economy, such as the e-commerce markets. Consumers and producers have adapted to selling and buying of products through online platforms, which is a great convenience. E-commerce is not only ideal for large companies, but also for small companies. An example of such markets is Alibaba, Aliexpress, and Amazon, just to name a few. These may have the same role, which is acting as a bridge between the producers and the consumers but is different in many ways, such as how they carry their business. 

 

What is Amazon?

Founded by Jedd Bezos in 1994, Amazon is the largest e-commerce and cloud computing known firms in the world, followed by other firms such as Facebook, Google, and Apple. The company has separate retail websites for countries and also ships products to other countries. The business model in Amazon is set such in a way that;

  • The company sells goods directly to consumers.
  • Producers list their item on the site whereby they pay Amazon a fee for the service.
  • It offers its amazon prime service whereby customers who have a prime account pay an annual fee and enjoy not only the same day or two-day shipping but also a subscription service whereby they can stream media items such as music and movies. 

 

What is Alibaba?

Founded in 1999 by Jack Ma, Alibaba is the largest retailer in the world, and also one of the largest internet business platforms with operations in more than 200 countries. It provides business to consumer (B2C), consumer to consumer (C2C) and business to business (B2B) services. With E-commerce being its major business activity, Alibaba also has other products such as mobile commerce, online money transfer, and online auction hosting. 

It acts as a middleman between the consumers and the producers through its extensive online platforms. 

It has a business model set such that;

  • Taobao, the largest site in Alibaba, is a fee-free marketplace. However, to generate advertising revenue, sellers in this platform pay so as to have a higher rank in the search engine. 
  • Income is also generated through Tmall, whereby large retailers sell their products and pay annual fees, deposits and commissions from the sales generated. 
  • Financial products such as Alipay which protects customers over the validity of transactions.
  • It also generates income through its newly launched microlending business platform.  

 

Similarities between Amazon verses Alibaba

  • Both are commercial e-commerce platforms
  • Both have achieved groundbreaking success in penetrating the E-commerce market
  • Both may derive their revenue by charging a fee on third-party sellers on the platforms

 

Differences between Amazon and Alibaba

  1. Year Amazon and Alibaba Founded

While Amazon was founded in the year 1994 in Washington, Alibaba was founded in the year 1999 in China. 

  1. Founders of Amazon and Alibaba

Amazon was founded by Jedd Bezos. On the other hand, Alibaba was founded by Jack Ma. 

  1. World rank

Amazon is ranked as the 9th most visited website in the world. On the other hand, TaoBao, a subsidiary of Alibaba is ranked 10th in the most visited websites in the world. 

  1. Streaming content services

Amazon is a major player in the provision of streaming content, both video, and audio, hence rivaling with brands such as Pandora or Spotify. On the contrary, Alibaba does not provide streaming content services. 

  1. Business model for Amazon vs. Alibaba

The business model in Amazon is set in a way that the company sells goods directly to consumers, producers list their item on the site whereby they pay Amazon a fee for the service and also offering its amazon prime service whereby customers who have a prime account pay an annual fee and enjoy not only the same day or two day shipping but also a subscription service whereby they can stream media items such as music and movies. 

On the other hand, the business model in Alibaba is set in a way that the platform offers a fee-free marketplace through Taobao. The sellers, however, pay a fee. Income is also generated through Tmall, whereby large retailers sell their products and pay annual fees, deposits and commissions from the sales generated. Other services such as Alipay micro lending business platforms are also part of the platform. 

Amazon vs. Alibaba: Comparison Table

 

Summary of Amazon vs. Alibaba

While these platforms may have different business models, they enhance trade by acting as a link between the consumers and the producers, hence contributing to economic growth. A person’s preference on the platform to use would depend on the location, the product and also the terms of each platform. 

 


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References :


[0]Image credit: https://www.flickr.com/photos/monstermunch/3365989893

[1]Image credit: https://upload.wikimedia.org/wikipedia/commons/thumb/7/70/Amazon_logo_plain.svg/500px-Amazon_logo_plain.svg.png

[2]Baker Paul. E-commerce and Digital Trade: A Policy Guide for Least Developed Countries, Small States and Sub-Saharan Africa. Commonwealth Secretariat Publishers, 2017. https://books.google.co.ke/books?id=H2VnDwAAQBAJ&pg=PA2&dq=difference+between+alibaba+and+amazon&hl=en&sa=X&ved=0ahUKEwiF4rykpPXfAhVy7OAKHYjOBssQ6AEIOTAD#v=onepage&q=difference%20between%20alibaba%20and%20amazon&f=false

[3]Damodaran Aswath. Narrative and Numbers: The Value of Stories in Business. Columbia University Press Publishers, 2017. https://books.google.co.ke/books?id=TiGtDQAAQBAJ&pg=PA89&dq=difference+between+alibaba+and+amazon&hl=en&sa=X&ved=0ahUKEwiF4rykpPXfAhVy7OAKHYjOBssQ6AEIMzAC#v=onepage&q=difference%20between%20alibaba%20and%20amazon&f=false

[4]Pagar Swarup. MUST READ IF YOU BECOME A GREAT ENTREPRENEUR.: (Entrepreneur And Business Book 1) Business and Entrepreneur . Series. Swarup Sanjay Pagar, 2018. https://books.google.co.ke/books?id=rTBFDwAAQBAJ&pg=PT10&dq=difference+between+alibaba+and+amazon&hl=en&sa=X&ved=0ahUKEwiF4rykpPXfAhVy7OAKHYjOBssQ6AEILTAB#v=onepage&q=difference%20between%20alibaba%20and%20amazon&f=false

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