Alibaba vs. Amazon: How China & America's E-Giants Stack Up Against One Another
On Tuesday, China's e-commerce giant Alibaba Group filed paperwork for an IPO in the U.S., which is expected to exceed Facebook's $16 billion IPO. For those not familiar with Alibaba, the company is the ultimate conglomerate, offering what seems like every service under the Internet sun, including retail, online web portals, a shopping search engine, online payment services, and cloud computing. Alibaba may be the overachievers of the e-commerce world, but it's the company's ambitious business model that makes them a force to be reckoned with. When they do go public, we can expect Alibaba to become a household name in the U.S.
To give you a better sense of this mysterious foreign e-giant, here is everything you need to know about Alibaba in comparison to our very own e-commerce giant, Amazon.
Alibaba has a clear advantage here: China's population is 1.4 billion, while the U.S.'s population is about 22 percent of that at 314 million. As a result, Amazon's active customer base, which is about 182 million, is dwarfed by Alibaba's, which is estimated to be around 300 million. Twenty-five thousand employees are dedicated to Alibaba's customer service alone.
Likewise, each company's respective sales also reflect this major discrepancy. Amazon reported sales of $74.4 billion for fiscal 2013 while Alibaba is projected to make $420 billion in 2014.
Amazon is an American innovation, no doubt about it. Offering everything from retail products to entertainment streaming and fresh produce, it is synonymous with one-stop shop. CEO Jeff Bezos is famous for his inventive business strategies, which have included the headlining-making helicopter drones, the controversial $5000 pay-to-quit payment, and the universally praised "1-Click Ordering." However, in comparison to its heavyweight cousin in China, Amazon's business strategy still seems antiquated.
Alibaba's business strategy is to invest in a multitude of brands, which allows the company to enter new markets. This makes Alibaba much more than an online retailer; its strategy puts it closer on the spectrum to Google. The Chinese company invests in everything from online shopping sites like Tmall and Taobao to email services like China Yahoo! and digital map and navigation solutions like AutoNavi, all in an effort to make the user experience seamless.
Instead of selecting an outside third-party service like PayPal to pay for your transactions, customers can use the Alibaba-owned online payment service Alipay. The Alibaba portfolio even includes an instant messaging service called Laiwang, which is now directly competing with China's prominent WeChat messaging service.
Each company offers a myriad of services. Besides any retail product you can think of, Amazon is also known for its Kindle ebook, its cloud computing service Amazon Web Services, its Fresh Direct-like grocer AmazonFresh, and its members-only Amazon Prime service, which allows customers to get free two-day shipping for a flat annual fee.
What's next for Amazon? The company just announced a partnership between its Amazon Prime Instant Video and HBO that will bring shows like The Sopranos, Girls, and Veep exclusively to Amazon Prime members. What this means to Alibaba is yet to be seen, but it may be the first brick to go in toppling streaming giant Netflix.
Alibaba's list of services is equally lengthy, if not even longer. Besides its main retail sites Tmall and Taobao, the Alibaba umbrella also includes Juhuasuan, a flash-sale site, eTao, a shopping search engine, Alibaba Cloud Computing, and online entertainment services via two companies, ChinaVision Media Group and Youku Tudou. The aforementioned Alipay, which gets compared to PayPal as much as Alibaba gets compared to Amazon, is more prevalent in consumers' everyday lives than its U.S. counterpart. Unlike PayPal, which is mainly used for online shopping, Chinese citizens use Alipay to pay their bills, make transfers, check their bank balance, etc.
What's next for Alibaba? The company is currently developing a financial services branch to add to its portfolio. In the not-too-distant future, customers will be able to invest and buy insurance with the Alibaba credit card. Talk about world domination. so it's a no-brainer that its IPO is expected to surpass that of a social media site, no?