Alibaba’s best shot at poaching business from Amazon

When you hear “e-commerce,” the first brand name to pop into your mind is likely Amazon. But despite Amazon being the undisputed king of online shopping, Chinese company Alibaba is slowly climbing upwards with 3.9 million average desktop visits per day, compared with Amazon’s 33.8.

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Over the past three months, Amazon’s traffic has steadily dropped, while Alibaba’s hasn’t significantly changed

In May, Alibaba filed for what may be the biggest ever IPO in tech. Alibaba will become the largest Chinese corporation to list in the U.S. The company, which includes a group of websites, claims to hold an 80% share of Chinese e-commerce.

In contrast, Amazon’s non-US sales growth slowed to 14% in 2013, about half of their 2012 non-US sales growth rate.

Currently, SimilarWeb PRO stats show that when Comparing these sites’ desktop traffic share, Amazon takes around 90%, leaving Alibaba with only 10%.

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The top 10 countries sending users to Alibaba and Amazon, including each site’s share

And the difference shows in the bottom lines as well. Amazon’s revenues of $74.4 billion make Alibaba’s $8.4 billion look like chump change in comparison. On the other hand, as an industry, annual e-commerce revenues are projected to break $200 billion by next year, so even a relatively small market share can be considered a fiscal success.

Differences between Amazon and Alibaba

Alibaba is not a knockoff of Amazon, as some would argue, it, actually has a totally different business model which appeals to a different type of customer and has different profitability considerations. Amazon is a straight up shopping site, where the user searches for a product and finds all the options and their various prices. Alibaba is built a bit differently: users choose a product and specify its features. Then the website serves up 10 different price quotes from which to choose.

Amazon offers product listings from their own inventory as well as third-party merchants, whereas Alibaba is strictly a marketplace – they are primarily in the business of selling a platform to merchants rather than products to end users.

Can Alibaba succeed in an Amazon world?

Alibaba will never beat Amazon at being Amazon. But if Alibaba can capitalize on the things that make it distinctively successful, it could be an even bigger business. While Amazon struggles to market to customers outside the United States, with enough aggressive marketing, Alibaba can take a big bite out of that market.

Amazon’s US e-commerce market share is estimated to be holding steady at 10% (the Enterprise version of SimilarWeb PRO lists them as owning nearly 12% of the US’s traffic in the Shopping category), and competition is stiff for the rest of the pie.

But a few weeks ago, Alibaba debuted its first US-specific property with a new website called 11Main, an online marketplace which showcases products from small businesses. The website seeks to entice former Amazon customers by offering a more curated shopping experience and giving each vendor its own identity on the site.

Alibaba can take advantage of its success in the search engines (over 50% of its traffic comes from search) to dominate in areas where competition is sparse. The site is getting almost no traction from social media, and Amazon has a very small percentage of social traffic as well. If Alibaba were to invest heavily in social media engagement, it could very well take a chunk of traffic away from its competitor.

About the Author -

Ben Jacobson is a freelancer specializing in digital marketing, content and community management for startups, small businesses, travel publications and entertainment brands.

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