Amazon’s Business Model vs Alibaba’s Business Model

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Amazon’s vs. Alibaba’s Business Models: Summary for a better understanding of the context

The e-commerce or electronic commerce market sector is a retail industry that has seen tremendous growth in the past few years. As one cannot deny the fact that the customer base is growing stronger day by day. More importantly, people usually prefer buying goods on the internet rather than arranging a specific time to get to the retail shop and purchase the product. There is an abundance of both large and small scale organizations which have substantially taken the full leverage of a blend of physical retail shops and basic web-based storefronts so to cope up with the growing demands of the mega-sized market of customers.

A common scenario for both contenders

Although, several electronic commerce companies such as Alibaba (Baba) and Amazon (AMZN) are the eminent market leaders who have been leading the way ever since their inception by offering all the goods and services that a company may need with the help of an online existence particularly. As both of these giants have unique features to offer to their customers.

What does it indicate?

Also having a similar kind of customer base to serve and cater to there are certain factors that indicate them being a pure electronic commerce organization, there are certain things which make the perception of these two companies concerning customers differ from each other in way too different manner. In Amazon business model, Amazon is a giant retailer for fresh as well as refurbished goods and services while on the other hand, the Alibaba platform is an opposite platform that acts as an effective mediator among the sellers and potential buyers.

I. The Business Model Amazon

Amazon is a company that is known and considered as the world’s biggest and the most massive scaled web-based retailer of goods and services throughout the world. Also, the amazon business model with the majority of the dynamic factors which can change and vary greatly with time. Primarily, the organization is known to be selling goods and services to the customers on a direct basis.

The numbers

Also, amazon’s business model showcased a specific number of products offered to the customer via the storefront while just a small share of goods and services is stored in the massive warehouse networks. Majority of the customers come to the company’s website with a common belief that the products purchased here are a whole lot cheaper and a better buying decision rather than going to the store and purchase the same at a slightly higher cost, and hence the customers who visit the company’s website end up buying the goods and services that have been looking for quite recently and eventually just end up buying products with all the other costs included such as shipping and packaging charges etc.

Vital update

Additionally, making it a bit more updated context concerning direct sales, Amazon offers a rock-solid platform for the ones who are into trading of the same kind of products to the customers. So all the products which as a mediator the Amazon as a platform offering the customers through those retailers are done in such a manner as these are far less usual items that are being sold to all the customers.

The customer packages

Also all the customers receive their packages on behalf of partner retailer from Amazon are usually the ones which a price tag that has a high value hence letting Amazon to avert from holding on to those goods who get sold a whole lot slower than the other fast-moving goods and services that the Amazon as provider has got to offer. Also, this makes the seller a little less trouble for the laying up of any extra charges which is sold to customers. The company rather prefers it as a whole to a certain part of the commission as a sales cut.

Rest of the significant happenings

On the other hand, the Amazon also needs to keep a track of the subscription natured models of the business with the help of its quite recently introduced premium service also known as “Amazon Prime” along with all the electronic appliances and products that the company is already proving as a customer product offering. So coming back to the “Amazon Prime” program that the company already is running with for its premium customers. The customers who come under the “Amazon Prime” program usually pay a specific amount to the company for best product offers, music media movies and so on. Also, the prime customers are the ones who get their product delivered way a lot quicker than the customers who did not go for the “Amazon Prime” program. With this one can understand what is amazon’s business model in detail.

II. The Business Model of Alibaba’s

As in comparison with the business model of amazon the majority of the customers based in America the majority acts as an e-commerce giant to some of the most regular customers that have influenced the customers. The company has a one of a kind product offering to the customers. With the help of its one of a kind customer-based model, it follows the company has a great share of the market and continues to dominate the market and the huge scale of customers it is serving and offering the service with the customers. Also, on the other hand, the actual business model of the Amazon is much more similar to the business model EBay when we compare it to business model of amazon which ebay used to follow.

Quite a powerful business model that was. It was very popular among the customers that offered great value to their customers by offering great quality products, on the other hand, the customers used to get the same products at a much cheaper price.

Acting as a mediator

In simpler terms, the company acted as an active mediator among the customers and the sellers who were selling the same product at a much higher price than intended. Or the customer rather found that it was way more difficult for them to go ahead and make a purchase. Hence this is when the company “Alibaba” came into the picture. The company finally started acting as an intermediary among the end customers and the retailers. All of that done with the online platform.

What more?

Moreover, the company also had to take care of the customer’s needs and the immense demand for Tobacco products. It represents itself as one of the greatest marketplaces where there is no need of paying up even a small dime neither from the customer nor from the retailer. The fee was rather concerned more with a successful transaction, but the company rather decided not to charge anything from the customer in the first place hence marking itself as the greatest free marketplace for customers and retailers. On the other hand, the customer base of the Amazon accounts to be over and above seven and half a million customers who use the platform on a day-to-day basis for their business operations.

The company’s internal search engine was a blessing to the company

Hence using the company as a medium, the brand usually ranked higher than any other company and acted as the dependable internal search engine on the company website itself. Hence allowing the company to take full advantage of revenues earned from the advertisement and promotion for the company as it imitates the core business model of Google.

The best part

Alongside e-commerce by-products as electronic commerce sites the company also has emerged as an active contender to the financial structure of China. Also on the other hand to handle the customer complaints about the products and validity concerns of security against any purchase done from their site, the company introduced its payment API gateway, commonly known as Alipay. A much more safeguarded platform, hence offering a much better and protected service to the customers who trust the brand in the name of quality and security, just in case of any occurrence of a retailer dying or unable to goods sold delivered.

Rest of the story

1. The 2 mentioned e-commerce giants are the ones who operate and manage a business without a physical store in the market.

2. Amazon leads the way in the American market of consumer durables while Alibaba does the same thing in terms of the b2b sector in China.

3. The products offered by Amazon reach directly to the customers when we look at amazon revenue model.

4. While on the other hand the products that are offered from Alibaba are solely operated and executed from the retailer’s end.

5. Alibaba asks for a specific amount from the retailer as it may only be then listed on their search list.

Hence with this the amazon revenue model could be looked up close and study about various other things that are concerned with the online world of shopping.

All in All

This was the complete article on what is amazon’s business model. If you have any questions related to this amazon’s business model then you can mention them in the comments down below.

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