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November 30, 2021

Alibaba vs. Amazon: Comparison And Review

Many people are confused about which platform is better when it comes to Alibaba vs. Amazon.  Both companies have made an impact on the e-commerce industry and provide a wealth of opportunities for sellers and buyers around the world.

Because both sites offer such a wide array of products, it can be hard to know which is best for your specific situation or what exactly each site offers in terms of services or features. If you choose the wrong platform for your business or don't fully understand your options, you could be selling yourself short of the marketability and success you need

The best way to decide which platform is right for your business is by comparing both platforms side by side so that you can make an informed decision based on facts rather than assumptions.

We've put together this comparison guide so that you'll know everything about these two e-commerce giants.

Let's get to it!

Amazon vs. Alibaba: An Overview

Alibaba

Alibaba dominates the Chinese market with millions of buyers and sellers online. Alibaba has two massive online marketplaces, Tmall and Taobao.

Image credit: Alibaba Group Holding Ltd 2020 Annual Report

Tmall is an exclusively business-focused platform created for larger businesses to conduct wholesale operations with suppliers who weren't previously involved in e-commerce. 

Tmall Global, which is available overseas, allows international brands to sell directly to consumers within China. Merchants pay a commission based on ad spend, product listing, promotion, and discounts.

Taobao is an eBay-like platform where individual merchants sell their products directly to consumers. It has over 580 million monthly active users and is one of the largest C2C markets. Taobao's advertising revenue comes primarily from online marketing services such as sponsored listings, storefront features, and premium positions.

Here is a chart showing the business and services that Alibaba Group Holding Ltd and Ant Group provides

Image credit: Alibaba Group Holding Ltd 2020 Annual Report

Amazon

Amazon is an American electronic commerce and cloud computing company with headquarters in Seattle, Washington. Amazon's revenue comes from e-book sales, video games, software development, internet service provisioning, and Amazon web services.

Amazon is the most prominent Internet-based merchant in the United States. Amazon offers a marketplace for independent sellers and individuals looking to sell new or used items. Amazon FBA (a fulfillment service by Amazon) lets merchants send their inventory to Amazon fulfillment centers where it will be stored until purchased; Amazon ships the product to the customer when bought.

Amazon vs. Alibaba: Similarities

Here are some features that Amazon and Alibaba have in common:

Payment system

Amazon launched Amazon Pay in 2007. Amazon Pay is a mobile and desktop site payment system that allows customers to pay with credit cards, debit cards, gift cards, or Amazon account balances.

Alibaba offers Alipay, launched in 2004, as its official payment method on Tmall and Taobao. Alipay is a third-party online payment platform that helps merchants reduce their risks of fraudulent transactions and allows shoppers to pay with debit or credit cards.

The payment systems help to ensure that both Amazon and Alibaba sellers and buyers are protected against payment fraud. This feature also makes it easier to run your business because you can keep all of your transactions in one place.

Diversification

Amazon's business model has expanded over the years. The company now sells other consumer goods in addition to electronics. Amazon has other services and products, including Kindle e-readers, Kindle Direct Publishing, Amazon Prime, Alexa, and Audible.

Alibaba's business model has also diversified, and now it offers a range of products and services, including Alibaba cloud, AliGenie, and Amap.

Diversification means there are several ways to increase your company's revenue without making drastic changes. This can be a great thing because it minimizes risk and makes your business more stable in the long run.

Customer Service

Both Amazon and Alibaba platforms offer 24/7 customer service: chat boxes on the site for customers to send questions anytime, call centers you can call to speak with a representative, and individual seller pages that give customers an open line to contact merchants.

Since customer service is available all the time and all over the world, you can sell to people from many different regions and time zones. You can also be assisted with any problems you may have with Amazon or Alibaba.

Customer Reviews

Both e-commerce companies have customer review functions where shoppers can leave feedback about their transactions for other customers to see. Both support product photos, videos, and GIFs as well as written comments from customers.

Customer reviews provide a great opportunity to increase sales, as well as help customers make better buying decisions. They also provide some insight into what your customers think of your offerings.

Pricing strategy

Amazon's pricing is driven by the pricing strategies of its sellers and other third parties, and it does not set prices for products and services sold on Amazon, except for a small selection of electronic devices such as Kindle e-readers, Fire tablets, and Echo.

Alibaba also doesn't establish or control the pricing of products and services sold on Tmall or Taobao. Prices are decided by merchants based on their business models.

Sellers and merchants control pricing for both platforms which makes it easier to keep some control over how much customers are willing to pay for your merchandise. This also helps sellers to achieve their desired profit margins.

Shipping rates

Amazon sellers set shipping rates for products purchased through Amazon's platform. 

Alibaba does not control how merchants choose to handle shipping fees so they can be very high, which is quite inconvenient for buyers. We have a guide on how to minimize alibaba shipping costs that will help you in your business.

So sellers on both platforms can charge more to cover their shipping costs.

Amazon vs. Alibaba: Differences

Here are some aspects that set Amazon and Alibaba apart:

Brand Presence

Amazon has several highly visible brand affiliates such as H&M and Nike, who regularly use their platform for e-commerce transactions. On the other hand, merchants using Alibaba's business model on Tmall and Taobao are small businesses.

Brand presence on Amazon is strong so sellers can use this e-commerce platform to increase their brand visibility. Alibaba's brand presence is not as strong, but they have a presence in Southeast Asia which opens up a new global market.

Fees

Amazon charges sellers either a lump sum for each month to use its platform or takes a commission on sales. Amazon also charges for Amazon Prime, which gives customers free shipping on certain items. This means that sellers need to increase their sales numbers in order to break even or make a profit.

Alibaba is a fee free marketplace and they don't have any subscription services. However, businesses are charged a fee to be featured above their competitors. Alibaba is better suited for businesses that are looking for online visibility and a potential increase in traffic without extra spending.

Subsidiaries

Alibaba group combines multiple companies under its parent company. There is Taobao for consumer-to-consumer (C2C), Tmall for business-to-consumer (B2C), Alibaba.com for business-to-business (B2B), 1688.com for wholesale transactions between businesses, and AliExpress for both B2B and B2C.

Alibaba caters to multiple business models so their customer range is very wide so it is easier for sellers to find their target audience. 

Amazon operates as a B2C platform, so Amazon sells products directly to consumers and allows other sellers to use their platform. This makes Amazon ideal for sellers who want a marketplace with a wider consumer range.

Core business

Amazon is an inventory-based retailer, meaning they own most of their products. This means that Amazon has overhead costs for storing, packing, and shipping its products. 

On the other hand, Alibaba operates as a platform connecting merchants with customers using a retail model based on direct order and indirect order. On Tmall and Taobao, sellers offer products but aren't responsible for holding stock - instead, manufacturers, brands, or third-party sellers fulfill the orders.

Alibaba is perfect for sellers who have manufacturers/distributors who can hold their inventory and ship products directly to customers. On the other hand, Amazon is better for sellers who don't have distribution channels that can handle shipping and returns.

Amazon vs. Alibaba: Differences

Is Amazon or Alibaba bigger?

In terms of revenue, Amazon is bigger - Alibaba reported $56 billion for 2019, while Amazon's revenue was $280.5 billion for the same period. Alibaba's business revenue is mainly from the Alibaba cloud.

Is Alibaba richer than Amazon?

At present, Amazon is richer; its market cap is $1.684 Trillion, while Alibaba's market cap stands at $415.77 billion as of September, 2021.

Is Amazon-owned by Alibaba?

No, Alibaba does not own any of Amazon.

Does Alibaba or Amazon have an IPO?

Yes, Alibaba debuted on the New York Stock Exchange in 2014, while Amazon has gone public multiple times since 1997.

Bottom Line

The question as to which platform is better depends on your specific situation. It's necessary to know what you'll be selling before making any decisions about which e-commerce site to use.

If you want to sell internationally, Alibaba would be the better choice because they have a more significant presence overseas and tons of international merchants that you could partner with to sell your products. Alibaba has been expanding its platform globally for years by opening up ten offices across the world. This means that Alibaba has a larger international presence.

To help you get started with Alibaba, read our guide on how to make money with Alibaba.

On the other hand, the Amazon marketplace is best for merchants who want to focus on selling within America or Canada without worrying about setting up their own online store. Amazon FBA is also a good option if you're not comfortable with running a business and want Amazon to handle all of the shipping and returns for you.

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Mike Vestil

About the Author

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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