Amazon final project

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Competitor Analysis

One of the biggest global competitors of Amazon is Alibaba. Alibaba is a

Chinese multinational company that focuses on e-commerce, internet, retail, and

technology. In this paper, the differences and the similarities between the strategies

chosen by Amazon and Alibaba will be analyzed and explained.

Alibaba is focused on the wholesale trading market. It has created a platform

whereby the buyers can interact with the sellers. Therefore, the company does not

operate an inventory. The sellers post their products on the website and potential

buyers buy them. Therefore, the company supports third-party sales. The third-party

sellers pay a particular fee to the company for using its platform to make sales. It also

gets a percentage of commission.

On the other hand, Amazon has also adopted third-party sellers. However,

Amazon also sells directly to its customers. That indicates that it holds some

inventory. Moreover, Amazon does not charge the third-party sellers a fee but holds

some of the sales prices as a commission (Shao, 2019). On the third-party sellers'

strategy, Amazon has a higher hand. That is because the products of the sellers are

evaluated to ensure that they are fast-moving goods. That prevents any problems that

may arise. On the other hand, Alibaba does not evaluate its sellers. That has resulted

in sellers selling pirated goods and low-quality products.

Since Alibaba has created an online marketplace for buyers and sellers to

conduct business, it has promoted diversification. Sellers selling any products can

register with Alibaba. That indicates that they will have a wide portfolio of products

and services. That makes them competitive in the market and ensures that they keep

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on attracting more buyers. Through diversification, Alibaba has a competitive

advantage to compete with other local, national, and international players in the e-

commerce market (Xu & Belleflamme, n.d).

Amazon’s strategy is to sell directly to consumers with a provision of few third-

party sellers. Therefore, they have not practiced diversification to the extent that

Alibaba has incorporated it in its business model. That indicates that when it comes to

diversification, Alibaba is more diversified compared to Amazon. Therefore it has an

upper hand on such a strategy. However, since Alibaba has created an online

marketplace for sellers and buyers, they cannot influence the price of the products

sold on its website. That may lead to some sellers overpricing their products. That

may lead to some sellers overpricing their products. That may harm the buyers.

Amazon sells most of its products directly to its customers (Wu & Gereffi, 2018).

That indicates that they can control their selling prices. Since Amazon has adopted a

low pricing strategy, the goods sold on its platform are more likely to be cheaper

compared to those sold in Alibaba.

Alibaba’s business model is effective in the company’s quest to expand further.

The company currently connects Chinese manufacturers with Western consumers.

That has been successful so far. Alibaba plans to enter the US market. By creating a

platform for American sellers to sell their products to the untapped Chinese market,

the platform may see a higher rate of growth. Through creating an online marketplace

for sellers and buyers, the company’s expenses are low while earning high profits.

Therefore, with their business model, the company is expected to grow more in the

future.

Currently, Alibaba earns more profits compared to Amazon. That is because

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Amazon has to incur the supply chain costs and at the same time, they have to ensure

that they acquire quality products from trustworthy suppliers. Alibaba does not have

any supply chain concerns thus increasing its profitability. That shows that Alibaba

has the resources to expand its business widely as they only need to attract more

sellers from different regions globally.

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References

Shao, Y. (2019). Discuss the Similarities and Differences of Amazon and Alibaba with

Respect to Cross-border E-commerce. Science Journal of Business and

Management, 7(6), 159.

Wu, X., & Gereffi, G. (2018). Amazon and Alibaba: Internet governance, business

models, and internationalization strategies. International business in the

information and digital age, 13, 327-356.

Xu, F., & Belleflamme, P. (n.d) " Alibaba vs. Amazon: A business model comparison.