Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) is swiftly catching up with its rival Amazon.com, Inc. (NASDAQ:AMZN). The company posted 55% growth on year-over-year basis in the third quarter of 2016, despite the massive slowdown in the Chinese economy. Alibaba’s revenue reached $5.1 billion in the period. The company earns from its commerce business, digital media, entertainment and Cloud computing. But Amazon.com, Inc. (NASDAQ:AMZN) is a behemoth, having a massive 41.2% market share in the US e-commerce industry, followed by Best Buy and Nordstrom. Amazon’s Cloud platform AWS, content business and its ambitious projects like self-driving cars and product delivery innovations easily dwarf Alibaba Group Holding Ltd (NYSE:BABA).
Alibaba’s Strategy in the US
Alibaba Group Holding Ltd (NYSE:BABA) is facing a tough time in the US. It had to sell its boutique e-commerce website, 11 Main, to OpenSky, just a year after its launch. The company is now trying to partner with companies in the US to gain market traction and penetration. The company acquired a stake in e-commerce marketplace and coupons company Groupon Inc (NASDAQ:GRPN) in 2016. Alibaba also owns stakes in Walmart-owned e-commerce company Jet.com and ride hailing service Lyft. Alibaba Group Holding Ltd (NYSE:BABA) has over 80% market share in China, but the company will have to understand the market dynamics in the US to be successful.
A major chunk of Amazon.com’s (NASDAQ:AMZN) revenue comes from electronics and merchandise products business, while 23% of its revenue is made from digital media content. Amazon has famous services like Amazon Prime and third party commission programs. Amazon’s Cloud platform is close to becoming a $10 billion a year business. The company generated $2.6 billion in the first quarter of 2016 from its AWS business, which represents 64% growth year-over-year.
Alibaba Group Holding’s (NYSE:BABA) business model is based on third party integration with different types of sellers and e-commerce websites. Alibaba’s e-commerce websites have 423 million annual active buyers as a whole. As of July 2015, Amazon shiped 3 million packages a day, while Alibaba shiped 12 million. Alibaba has a natural edge over Amazon.com, Inc. (NASDAQ:AMZN) due to the population of its home market. Alibaba Group Holding Ltd (NYSE:BABA) has an 80% market share in China which has a population of over 1.4 billion, while Amazon is primarily targeting 319 million people in the US.
How Donald Trump’s Presidency Can Change Everything
Amazon.com, Inc. (NASDAQ:AMZN) may have a tough time ahead. Amazon’s CEO Jeff Bezos is not in good terms with President-elect Donald Trump. Mr. Trump accuses Bezos of using The Washington Post for his personal benefits and of not paying taxes. It is important to note that Jeff Bezos acquired The Washington Post for $250 million back in 2013. Trump and Bezos also were engaged in a Tweet-war in 2015, in which Bezos offered to shoot Trump into space by putting him on a rocket.
Jack Ma and Donald Trump Planning to do “Great Things”
In an interesting development on Monday, Alibaba Group Holding’s (NYSE:BABA) CEO Jack Ma met President-elect Donald Trump in New York for 40-minutes. Ma surprisingly promised Mr. Trump to create 1 million new jobs in the country by helping small businesses sell their products to China and Asian consumers. After the meeting, Trump said that Ma is a “great, great entrepreneur” and he is planning to do “some great things” with the Chinese billionaire.
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