e-marketing -- What is Alibaba.com's position in the market?

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kipling2448 | (Level 3) Educator Emeritus

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While Alibaba.com's net revenue lags far behind that of Amazon.com, it is a larger company with a far larger "captive" audience.  Alibaba dominates its home market -- China -- accounting for 80 percent of the Chinese online shopping market (see the Wall Street Journal page linked below).  While Amazon.com's net revenue dwarfs that of Alibaba.com's, however, the Chinese company has been more profitable (see the data provided at www.chinainternetwatch.com, linked below).  Alibaba's wholesale -- or B2B, for "business-to-business" -- share of the market represents its most successful area, and its origins lie in that sector of the online shopping industry.  Within that particular sector, it currently holds 70 percent of the Chinese market. Alibaba is the largest of the online retailers and wholesalers, due mainly to its control of the huge domestic Chinese market, and, as noted, is a more profitable company than Amazon, which struggles to remain profitable.  It only recently transitioned from a privately-owned company to one traded publicly, so a lot of uncertainty remains regarding its future and its impact on the global online shopping industry.  It is obviously well-entrenched in the largest individual market in the world, and its expansion into the U.S. market could prove profitable, but, again, it is too soon to tell.  As an article in a March 2013 issue of The Economist noted:

"Amazon, in some ways a similar company, supports a market value of $117 billion with no profits to speak of. And Alibaba will provide an attractive platform for investors trying to profit from China’s booming internet economy." ("Alibaba: The World's Greatest Bazaar," http://www.economist.com/news/briefing/21573980-alibaba-trailblazing-chinese-internet-giant-will-soon-go-public-worlds-greatest-bazaar)

So, to summarize, Alibaba is the larger, more profitable corporation; Amazon continues to generate more revenue.  Given China's future, with its 1.3 billion people and an ever-growing consumer class, and Alibaba's lock on that huge and lucrative market, it will likely overtake Amazon eventually in net revenue. It does, however, have a ways to go before that happens.  In the meantime, its future as a viable commercial entity seems secure, whereas Amazon's history of operating at the margins of profitability may not bode well for the American company's future.

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