Difference between Amazon and Alibaba

With constant advancement and improvement in technology, there has been a growth of not just one but many sectors of the economy, such as the e-commerce markets. This has led to consumers and producers adapting to buying and selling products on various online platforms; an example of such markets are Amazon, AliExpress, and Alibaba, to name a few.

Both Amazon and Alibaba are giant e-commerce companies operating primarily without physical stores. While Amazon dominates the American shopping space, Alibaba does the same in China.

We can see that Amazon sells its products directly while also serving as an intermediary for other sellers and cutting sales. In contrast, Alibaba charges merchants fees to appear higher on its search rankings. Although both of these have the same roles, they act as a bridge between the producers and consumers, but they are different in many ways, such as how they carry out their businesses.

Amazon.com

Amazon, also known as Amazon.com, is an e-commerce business-led and founded by Jeff Bezos, the wealthiest person in the world. Amazon is the second-largest employer in the world with around 613,3000 employees; it started on July 5^th, 1994, and has over a million employees now. This top-class company’s idea struck Bezos during a country trip from New York to Seattle. Bezos originally founded Amazon out of his garage and then turned it into something magical; he almost called this company “Cadabra” from “abracadabra,” but his lawyer misheard it as “cadaver,” so he renamed it Amazon suggesting that the company has a considerable scale and will be on the top lists in an alphabetical search.

This American multinational company is based out of Seattle, Washington, with Bezos as its CEO. It works for artificial intelligence, digital streaming, and e-commerce. Amazon is one of the most popular e-commerce websites. It ranks among the five biggest companies based in the United States of America, besides the other companies like Google, Facebook, Apple, Microsoft, and Amazon.com. This company which initially began by selling books online, now sells everything imaginable, from clothes, furniture, appliances, food, electronic gadgets, music, etc., to marketing video and audio streaming and a lot more variety of products and services all around the world. Amazon works worldwide, is one of the largest sales companies in the world, and makes the most significant revenue. It has subsidiaries like Abebooks, Amazon logistics, Amazon air, Goodreads, Graphiq, Wholefood market, Body Labs, and Zappos, to name a few. As of 2017, its revenue was projected at US$177.866 billion.

Alibaba.com

Alibaba was founded in 1999 by Jack Ma and his 18 friends who he led; it originally started as a China-based B2B marketplace that catered to small and big businesses exporting Chinese goods globally; it became profitable just three years after it was founded. Then Alibaba has steadily and widely grown. Although Jack ma stepped down as the chairman, he built a powerful empire and solid foundation, with Alibaba’s current value being more than a quarter-trillion USD. It is one of the largest retailers in the world and one of the largest Internet business platforms, which operates in more than 200 countries. It also provides business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C) services. Although e-commerce is its significant business activity, Alibaba has other products like online money transfers, online auctions and hosting, and mobile consumers. Alibaba acts as a middleman between consumers and producers through its comprehensive platform.

Alibaba’s business model has the following −

• Taobao is the largest site in Alibaba, a fee-free marketplace.

• Income is also generated through Tmall, where large retailers sell their products and pay annual fees, deposits, and commissions from the sales generated.

• Alibaba has financial products such as Alipay, which protects the customers over the validity of the products.

• Income is also generated through its newly launched micro-lending business platform.

Differences between Amazon and Alibaba

The following table highlights the major differences between Amazon and Alibaba −

Characteristics	Amazon	Alibaba
Launch year	Amazon was founded on 5th July 1994 in Washington.	Alibaba was founded in the year 1999 in China.
World rank	It is ranked as the 9th most visited website in the world.	Taobao, a subsidiary of Alibaba, is ranked as the 10th most visited website in the world.
Founders	Jeff Bezos founded it.	Jack Ma founded it along with his 18 friends who he led.
Business model	Amazon’s business model is set so that the company sells goods directly to its consumers. The producers list their items on the site, where they pay Amazon a fee for the service provided to them. Amazon also offers its Prime service, where the customers have to pay an annual fee to enjoy same-day or two-day shipping, and a subscription service where they can stream media items like movies and music.	Alibaba’s business model is set so that the platform offers a feefree marketplace through TaoBao. But the sellers have to pay a fee, and their income is generated through Tmall, where large retailers sell their products and pay annual fees, deposits, and commissions from the sales granted. It also provides many other services, such as Alipay micro-lending business platforms that are also part of the platform.
Streaming content services	It is a significant player in providing streaming content, both audio and video, causing rivalry between brands such as Pandora and Spotify.	It does not provide any streaming content services.

Conclusion

While both these platforms are commercial e-commerce platforms, have achieved groundbreaking success in penetrating the e-commerce market, and may derive their overall revenue by charging a fee on third-party sellers on the media, they still have different business models that distinguish them from each other. They enhance trade by establishing a link between consumers and producers, contributing to economic growth. Generally, persons prefer to use a platform depending on the location, the media, the terms and rules, and the regulations of the forum.