Alibaba vs Amazon – How does their business models differ? – The Asian Contrarian

2018 was a good year for Amazon, who ended the year with share price up 25%. Its asian rival however, Alibaba had a year to forget — its share price was down 25% for 2018. At the time of this writing, Amazon is the world’s biggest e-commerce company by market cap at USD800 bil, while Alibaba is twice as small.

Both are leaders in their respective markets (Amazon in the U.S. and Alibaba in China) and are quickly expanding their empires into new businesses such as groceries and cloud. However, the difference is that Chinese consumption presents an opportunity for tremendous growth thus, investors see Alibaba as a proxy for it.

Both Alibaba and Amazon’s business models aims to provide ease of transacting and connecting consumers and merchants. However, both have unique methods in which they go about executing this strategy because of the different environments in which they operate in.

E-commerce revenue for Amazon includes online and physical stores, third-party seller services, subscription services, and advertising. For Alibaba, revenue includes core commerce, digital media and entertainment, and innovation initiatives. Both companies are investing in new segments like online subscription services (streaming music and video) that have yet to make profits but are fast-growing businesses with big potential for the future…