Amazon is a household name, not just in the United States but in various parts of the world. Guess who’s giving it a run for their money? Alibaba. That’s right – China’s answer to retail has its stock increase in value more than Amazon this year, potentially surpassing them in market cap soon. With this bold impact in mind, there are still naysayers who believe Amazon still trumps Alibaba in the war for global retail dominance.
Both Winners to an Extent
Don’t get it wrong – in the Amazon versus Alibaba retail war, it is not a matter of who is dominating whom. The fact of the matter is, both companies have done exceptionally well so far, not just this year but in the previous years as well.
Amazon has been doing well, with its market value increasing 30 percent this year.
Alibaba’s stock has impressively increased to nearly double its original. Today, it is valued at $483 billion, while Amazon is worth $720 billion – the biggest in retail the world has seen to date.
Both companies dominate e-commerce in their home bases – Amazon in the US and Alibaba in China. Both are also demonstrating growth, with Alibaba becoming a target for many investors. Interestingly, Alibaba attracted some big hedge fund names including David Tepper and Dan Loeb, both of whom picked up shares in recent months.
Again, both companies are sharing in the limelight when it comes to analysts – although Alibaba once again has made an impressive edge when all 47 brokers contributed to the Chinese-based e-commerce giant’s target price of $197.51 per share, 15 percent higher than their actual worth. However, Amazon’s target price of $1,150.46 is 17 percent higher than its worth.
Although Amazon’s market cap of $427 billion is still beyond Alibaba’s $265 billion, things may switch up pretty soon. For example, Amazon has 310 million customers at present, while Alibaba already has 493 million monthly users. Additionally, Alibaba’s Singles Day – the company’s answer to America’s Cyber Monday and Black Friday – already drives as much as $17.49 billion worth of sales. Alibaba’s incredible run points to the possibility it may surpass Amazon real soon.
A Global Perspective
Amazon and Alibaba have their own areas of dominance around the world. On one hand, Amazon is the biggest retail name in all of North America and Europe, and is trying to penetrate India, Singapore, and Australia. On the other hand, Alibaba dominates China and is making a number of strategic partnerships throughout the rest of Southeast Asia, as well as India and Australia – proving to be a proper contender to America’s biggest name in e-commerce.
Both companies are capitalizing on the following trends:
- The increase in internet presence
- The growth of global wealth
- The digitalization and mobilization of global financial systems
Interestingly enough, their approaches are different – Amazon acquires while Alibaba invests, having made twice more minority investments in the rest of the world (outside of the US or China) compared to Amazon’s efforts.
Both Amazon and Alibaba are clearly global forces hungry for retail domination in and out of their respective home bases. With billions worth in revenue still potentially up for grabs in other countries, competition between the two is bound to increase. Experts believe Africa and Latin America are the next possible areas these e-commerce giants may try to expand their businesses in.
