Amazon competing with China's Alibaba for global e-commerce dominance

Amazon and Alibaba together are the largest e-commerce companies on the globe. Together, their market cap is a whopping $1.1 trillion — and both are competing to expand their global reach.

Amazon is aggressively entering India, Singapore, and Australia while Aliibaba is expanding in Australia and also betting on successes in India and Southeast Asia.

Up until now the two competing giants have mostly avoided direct competition as they have been dominant in different areas of the world but this is likely to change as the two are both expanding their global reach.

Alibaba Holdings

Alibaba Group Holding Limited is a China-based multinational company providing e-commerce, Internet, AI and technology. In January this year, the company's market cap was $527 billion making it one of the top ten most valuable companies in the world.

Alibaba has operations in over 200 countries in 2016. Online sales surpassed those of Walmart, Amazon, and eBay combined since 2015. Revenues have been rising three percent each year.

Jack Ma co-founder of the Alibaba Group said: “We believe that globalization is the future.”

Amazon

In 2015 Amazon overtook Walmart to become the most valuable U.S. retailer by market cap. It is the 4th most valuable public company in the world, and also the largest Internet company by revenue in the world. It is also the 8th largest employer in the U.S. with about 566,000 employees as of 2017. In the same year, Amazon acquired Whole Foods Market for $13.4 billion increasing its market presence as a brick and mortar retailer.

The companies use different expansion strategies

Amazon expands by acquiring companies. On the other hand, Alibaba invests and acquires stakes in companies. Outside the U.S. and China, Alibaba has taken a minority stake in twice as many companies as Amazon. In contrast, Amazon has acquired five times more companies than Alibaba.

While both companies are trying to take their e-commerce and logistical expertise to a global level, Amazon is focusing on its Marketplace brand with a model of low prices, with a vast selection and quick delivery. Alibaba is expanding its logistic net around the world and wants to connect its global e-commerce markets.

Conclusions

Both companies are constantly expanding their presence around the globe as there are still many parts of the world where online retail markets remain undeveloped and untapped. Both companies have considerable growth potential in the short term.

By merger and acquisition, investment and partnerships the two companies will continue expanding in high growth markets such as India, Australia and Singapore. Competition between the two companies is likely to ramp up. Soon other areas such as Latin America and Africa could become areas where both companies want to expand their reach.

Previously published in DIgital Journal