Unveiling Strategies and Operations of Alibaba and Amazon

INTRODUCTION

This essay is going to highlight the similarities and dissimilarities of the international trade by the two leading online retail marketers Alibaba and Amazon. Cross-border e-commerce or International E-commerce is referred to as the process in which customers buy inline product or service from the merchants, that is located in the overseas country or jurisdiction. According to Teagarden et al. (2018), international business is based on the ability of marketers to sense the customer interest, demand and current market trend. Through online global network, businesses are exposed to the global market through which they are able to connect with millions of customers and client across the globe As stated by Coviello (2015), cross-border trade emphasizes on the innovative business operation and customer dealing process of firms through which marketers can easily establish their footprint on the international market. The two e-commerce giants are the active players in the cross-border market. While Alibaba and Amazon show distinctive feature in making them more efficient e-commerce player, they also represent difference in particular cross-border strategies. For those who are seeking business dissertation help, The essay will show the similarities as well as differences in cross-border operation and strategies of this two e-commerce giant.

Reason and effect for choosing this question:

This question has been chosen for representing the comprehensive discussion on the cross-border e-commerce. This question has more practical implementation than the other question. Through demonstrating the example of cross border commerce of two retail giants, Amazon and Alibaba, this question represents the importance and practical implementation of international business. This question is also chosen over the other to highlight the innovative business operation and the customer dealing process n terms of fulfilling the demands of the overseas customers.

Cross-border e-commerce:

According to Meyer and Peng (2016), cross-border e-commerce is the international business operation that occurs between the consumers and merchant, who are situated in two different countries. Cross-border e-commerce or international business is important platform in order to deal with the overseas customer with fulfilling their demand. Cross border business, allow businesses to come out of their known market trends and enter into new market to grab the innovative market opportunities. As stated by LIU et al. (2017), assist markets to expand their business by representing their products and service on an international market platform in front of global market leaders. Cross-border trade of the two e-commerce giant Alibaba and Amazon has both the similarities as well as difference to deal with their own marketing criteria (amazon.com, 2018).

Similarities:
International market strategies:

Alibaba and Amazon are the largest players of the e-commerce market, who together operating over the $1.1 T in the market cap. As mentioned by LIU et al. (2017), cross-border trade depends on the ability of companies to deal with international competition to grab the overseas market opportunities. Although Amazon and Alibaba have their own international market strategies, both of them have taken active step in avoiding the market competition in dominating the different part of the global retail market. Similar to the Amazon, Alibaba also believes in the globalization to expand their international footprint in the global retail market (alibaba.com, 2018)

International business model of the Alibaba is confined into the B2B business model; rather it has comprehensive C2C retail platform and another B2C marketplace (Liu and Hong, 2016). Through this process, Alibaba not only works as intermediary between the two businesses but also they make strong connection between business and consumers. For improving the global B2B trade, Amazon provides different facilities to B2N sellers such as proper pricing, quality discounts, lower referral fees, GST invoice and perfect inventory as well as product listing facility (amazon.com, 2018). Amazon also provides the B2B service to all the international as well as global business customers to assess the full suite of eth business features. According to Ferreira et al. (2014), through B2B platform manufacturers can easily reach the verified business customers across the globe.

Alibaba has taken several effective steps to develop their international footprint, such as it launches the Alipay, the online payment system for facilitating the international online transaction (Wang and Miller, 2018). Similar to the strategies taken by Alibaba to grab the cross-border trade opportunities, Amazon has also offered wide range of products including games, electronics, furniture, beauty products and clothes. Moreover, Amazon has introduced the e-reader in 2007, to provide opportunities to international customers in reading different books over the internet. Like Amazon, Alibaba has also taken the diversified business strategies, such as developing the cloud computing business. Alibaba has launched Aliyan, the cloud computing business. According to Czinkota (2016), cloud-computing business is one of the important cross trade strategies for marketers, which make them able to grab the opportunity to meet demands of huge number of international consumers.

As stated by Goldman et al. (2018), logistic marketing plan is important for most the marketers in order to run the cross-border marketing. Through this process, marketers identify the competition as well as market trend in the international market that will help them to develop smart tactics for competing with global rivals. Like Amazon, Alibaba is also relied on setting the independent logistic firms in US to deliver the goods that are sold through online process. In this purpose, Alibaba launched the Double 11 Shopping Festival in order to stimulate the cross-border online shopping (Zhang et al. 2016,). There are similarities between the cross-border business model of Alibaba and Amazon.

Alibaba’s Business Model:

Like Amazon, Alibaba diversified its business activities, which is based on the investment and cloud computing. However, this company operates through the unique combination of the business models, China's retail giant Alibaba focuses on facilitating the sales of quality goods between the sellers and buyers in the overseas market. Like Amazon, Alibaba focuses on developing cloud-computing service to expand their international footprint (Guillotin and Mangematin, 2015). Alibaba focuses on developing the extensive network of websites for acting as efficient intermediary between the sellers and buyers (alibaba.com, 2018).

Amazon’s business model:

More or less similar to Alibaba, the retail giant Amazon operates its international business functions under the business model of different moving parts. Firstly, this company sells the products directly to customers (Ferreira et al. 2014). The percentage of the products and services are offered to eth consumers through Amazon online storefront with maintaining the small mark up and proper inventory process. Therefore, most of the customers who visit Amazon’s website assume that the product price is lesser than the other online retail house.

Amazon also follows the Subscription-based Business model, which is known as Amazon Prime service. Under this service, consumers have to pay the annual fee for securing the same-day or two-day shopping on different products. Amazon marketers use the Five competitors Forces Model, through which they provide the equal priority to all the five business factors such as suppliers, existing competitors, substitution, buyers and new entrants. Both Alibaba and Amazon follow the concept of this model in order to expand their international business in the overseas market(forbes.com, 2018).

Analysis based on the similarities:

The most similar cross border operations of these two retail giants are logistic marketing process; cloud based computing process and international market strategies. Both these company have innovative marketing strategies to deal with overseas customers. Moreover, they have maintained logistic marketing process through which they can make comprehensive market research on the new market as well as market trend. Overseas market operation of both Alibaba and Amazon is based on the relevant distribution and logistic processes that assist marketers to deal with each demand of oversees customer and met their demand. Aforementioned similarities between Alibaba and Amazon are also important as they describe the profitability of each company that is gained through taken proper international marketing approaches. Compared to similarities in market strategies and cross border business model, the similarities between these two company in cloud based computing process and logistic market operation are important to describe the relevant market strategies that has been taken. Moreover the similarities of Alibaba’s and Amazon’s business model are important which demonstrates that both companies are going to maintain their market diversification, target market and supply chain management to meet the ever changing demand of overseas customers.

In this aspect, Teagarden et al. (2018) argued although these two-business models are effective in operating the international business, marketers need to focus on the resource and economic capacity of the particular company to ensure that which business model will be relevant for this business. Aforementioned similarities focus on the fact that, for operating successful cross-border business process, it is important for making strong connection between the customers and business.

Differences:

With the aforementioned similarities, the two online retail giants have several differences, which are as follows:

Market expansion:

Amazon currently dominates the retail market in North America, India and Europe. On the other hand, Alibaba controls the domestic retail market in China and South East Asia. Alibaba’s business is based on wide web of investments and strategic partnership with the global brand (forbes.com, 2018). Both companies operate their business in India and Australia focusing on the three trends such as growing wealth across the globe, increased internet penetration and the global financial system. In order to expand the international market operation, Amazon focuses on the merging with different reliable brands. On the other hand, Alibaba focuses on investment in the US and South Asian countries to expand its cross-border marketing. However, Alibaba takes the minority stake in twice as many firms as the Amazon, while Amazon has merged with and acquires 5X more forms than Alibaba (alibaba.com, 2018)

Global market strategies:

When it comes to pursuing different useful strategies for international business expansion, Amazon and Alibaba show apparent difference in their operation management, supply chain process, inbound, and outbound logistics (forbes.com, 2018).

In the case of Amazon, the retail giant focuses on globalizing its branded marketplaces. For this reason, Amazon spent billions of dollars on their marketing process in order to bring innovative business model, which would deal with low prices, fast delivery and vast selection (Chang and Allen, 2016).

In the case of Alibaba, this brand prioritizes the expansion of its logistics network across the globe. Through investing in different convenient and quality marketplace, Alibaba wishes to connect all the subsidiaries in the e-commerce market (Zander et al. 2015). Through offering the B2B and B2C platform, Alibaba is going to maintain strong connection between the sellers and buyers in order to make proper marketing relationship with different companies across the world (forbes.com, 2018).

Business operation:

As stated by Teagarden et al. (2018), cross-border business operation is based on the ability of marketers to understand the demand and market trend in the overseas marketplace before operating business there. Both the Amazon and Alibaba are two retail giants that provide the quality goods and service to millions of customers across the globe. However, the fundamental difference lies between these brands’ operation is, Alibaba is marketplace of putting buyers and sellers together. As stated by Wang and Miller (2018), business operation in term of expanding the international footprint often deals with both the inventory management and conducting proper dealing between eth sellers and buyers. Like Amazon, it never owns the inventory of merchandise products (amazon.com, 2018).

Marketplace:

Although the two retail giants Amazon and Alibaba offer customers wide range of products to satisfy their needs, these two brand different in case of marketplace reach and the customer dealing process. In the case of Amazon, it is one of eth most famous retailers who sales its products directly to the customers (Hutzschenreuter et al. 2016). Amazon marketers put their optimum effort in ensuring the delivery of convenient as well as reliable service to all its customers. On the other hand, Alibaba is the online platform for different brands and it is not the retailers like Amazon. Unlike Amazon, Alibaba e-commerce business deals with integrating different sellers and buyers in the sale place to make the healthy business relationship between them(alibaba.com, 2018),.

Dealing with customer database:

Both the Alibaba and Amazon have their own process to collect and manage the database of customers who use the marketplace of these two brands. Amazon does not share its customer database with the third-party sellers as well as brand in order to maintain the confidentiality and authenticity of the database (Coviello, 2015). In the case of Alibaba, the data management process is different. Alibaba believes in sharing of sellers and buyers database to facilitate more sales across the globe. Through data sharing process, Alibaba focuses on empowering both the sellers and buyers regarding their personal and professional details, economic status, business interests and demand. Amazon focuses on representing string competition to the competitors, which is main reason behind their not sharing the customer, database with third-party sellers or brand (forbes.com, 2018). Alibaba’s Tmall is one of the largest online mall provides marketing opportunity to different brands in terms of having branded storefronts to approach different customers (alibaba.com, 2018). Alibaba generates most of its revenues from the advertisement as well as commissions from the sales.

Analysis based on the differences:

Aforementioned differences in payment system and marketing strategies of Amazon and Alibaba, demonstrates the ways that marketers need to adopt for dealing with the overseas marketing process. It is important for all marketers to understand the needs as well demands of the international market to establish their international footprint. Implementation of these differences in practical marketing field will assist future marketers to deal with the ever-changing market trend and customer demand. Aforementioned differences regarding the cross border marketing of Alibaba and Amazon focuses on different marketing aspects. Market expansion is one of the most important cross border aspects in which Amazon and Alibaba have their strategies to deal. The core difference between Amazon and Alibaba emphasizes on market trend and customer interest of particular market in assisting marketers whether their business is relevant to grab the market. For example, Alibaba grab most of the retail market in China by understanding the market demand of the local customers.

Conclusion:

From the above discussion, it can be concluded that both the two retail giants, Alibaba and Amazon dominate different parts of the global retail market. They expand their international footprint in terms of providing huge marketing opportunities to the customers as well as different brand. However, these two online platforms work for eth common goal, which is establishing their position in the international market, they have several differences regarding their business operation, way to deal with international customer and market strategy. While Alibaba acts as biggest online platform for sellers and buyers, Amazon emphasizes making itself largest online retail hub to sell goods directly to customer.

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