Posted on 06/14/2017 6:01:19 PM PDT by 2ndDivisionVet
Introduction
Today, we take a look at the two online retail titans, consider how each business model differs and delve into the trends shaped by the financial results.
The biggest difference between the two is that Amazon (NASDAQ:AMZN) primarily sells directly to consumers, building a network of warehouse and distribution centers with a goal of ever-improving fulfillment. Alibaba (NYSE:BABA), on the other hand, is less capital intensive and provides only a platform from which other businesses can sell directly to consumers. While both offer a platform for other sellers, AMZN is more focused on the logistics and engaging directly with consumers. That is not to say that Alibaba does not engage with consumers, but that it is not a part of the full retail purchase cycle.
Another way to look at the two is that AMZN is more likely to create jobs internally within the company while destroying jobs at brick-and-mortar retailers. Meanwhile, BABA may have created a medium with which retailers can compete more efficiently and enter new markets, therefore creating competition among retailers, but it also is more likely to help create jobs externally within the small and medium sized retailers that its platform enables. AMZN does some of that, too, but it then competes directly with its partners; BABA refrains from competing with its partners.
Obviously, both companies are much more than just retailers. AMZN is a leader in cloud services to businesses, large and small. This is, once again, another capital intensive model, but at least it produces higher margins and free cash flow. It manufactures and sells electronic devices, once again, another relatively capital intensive business that requires much investment. AMZN also offers online streaming of movies and TV episodes. It is into online publishing, co-branded credit cards and other peripheral supporting services....
(Excerpt) Read more at seekingalpha.com ...
I’ve only used Alibaba once. About 6 months ago, I bought a dozen oral mercury thermometers from them. I couldn’t get them anywhere else.
A lot of e-cig hardware is bought from Alibaba, since that is where it all started (China).
1 has extensive contracts with delivery partners including On Trac, USPS, UPS, FedEx and their own fleet of delivery trucks and independent contractors.
The other pays roughly a dollar to ship virtually any package under 3 pounds to the United States, up to 9 dollars cheaper than a domestic shipper can get. Volume sellers will pay 14 cents postage to ship an under 5 ounce package to the US.
What, you say, they just make a marketplace for Chinese sellers and buyers, right? Nope, they are also the primary conduit for those who wish to access the highly preferred first class international packet service - the catch is they have to deliver their packages to the appropriate center.
I never heard of the other company. I’ll take a look though. My family is huge Amazon buyers even groceries. I love them.
In the strict capitalistic sense, this is an interesting issue: 1) patronize the most efficient seller, or 2) patronize the most sustainable seller. Of course there should be no assumption the most efficient seller is not sustainable, but consider the comparison on face value.
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