`

Faculty of Economics and Management

Master of Business Administration (2021)

Dr. John E. Brennan

Amazon vs Alibaba

By

Ahmad Saad

Matriculation Number:

255831

Address: Johann-Gottlob-Nathusius-Ring 7, Magdeburg, Germany

`

Table of Contents
Chapter 2 – E-Commerce Industry..................................................................................................1

2.1 Introduction, Background and Future of E-Commerce Industry...........................................1

2.1.1 History of e commerce....................................................................................................1

2.1.2 Consumer behavior..........................................................................................................2

2.1.3 Future of the industry......................................................................................................2

2.1.4 Global reach....................................................................................................................3

2.1.5 Technology in ecommerce..............................................................................................3

2.2Advantage of E-Commerce.....................................................................................................3

2.3 Impact on various sectors.......................................................................................................7

2.4 Resilience and Adaptability...................................................................................................8

Chapter 3: Comparative Analysis....................................................................................................9

3.1 Comparison of Companies.....................................................................................................9

3.1.1 Alibaba............................................................................................................................9

3.1.2 Alibaba history..............................................................................................................11

3.1.3Amazon..........................................................................................................................13

3.1.4 Amazon History............................................................................................................15

3.2 Comparative analysis...........................................................................................................16

3.2.1 Online Shop Revenue....................................................................................................17

3.2.2Ratios and Revenue........................................................................................................18

3.2.3 Physical shop revenue...................................................................................................19

3.2.4 Ratios and Revenue.......................................................................................................20

3.2.5 Currency........................................................................................................................21

3.2.6 E-commerce Dominancy...............................................................................................22

`

3.2.7 Global Reach.................................................................................................................23

3.2.8 Competitive Strategies......................................................................................................24

3.2.9 Future Outlook..................................................................................................................25

Chapter 4: Financial Comparison..................................................................................................26

4.1. Comparing Revenues of Ali Baba and Amazon.............................................................26

4.2. Cost to Revenue Comparison..........................................................................................27

4.3. Sales and Marketing Expenses to Revenue Comparison................................................29

.......................................................................................................................................................30

4.4. General Administrative Expense to Revenue Comparison.............................................31

4.5. Assets/Liabilities to Revenue Comparison.....................................................................33

List of References..........................................................................................................................36
`

Acknowledgment
!!
`

Chapter 2 – E-Commerce Industry

The e-commerce industry which is an abbreviation of electronic commerce basically refers to
buying and selling of the services and goods over the Internet. It involves the use of online
transactions between the consumers and different businesses as well as transactions between
different businesses. Due to the widespread increasing use of Internet and digital technologies
ecommerce has shown rapid growth with time.

2.1 Introduction, Background and Future of E-Commerce Industry

E-commerce has widely been integrated in today’s world.

2.1.1 History of E-Commerce

The history of ecommerce extends far beyond the significant milestones that has basically
transformed the operation of the businesses and the shopping experience of the consumers. The
evolution of ecommerce can be visualized from the beginning of its times towards. The present
landscape in the digital technologies.
The roots of e-commerce goes beyond 1970s and 80s when the businesses started their
experimentation with electronic data interchange (EDI)as it is a process that ease electronic
transactions. 1990s witnessed the boom of the Internet which eventually paved the way towards
emergence of online marketplace creation. Amazon and eBay were basically the pioneers of the
period. The late 1990s and early 2000s indicated the surge of ecommerce startup businesses.
Though many businesses did not survive this era, it also emphasized on the integration of online
transactions in the everyday life. The 2000s indicate the advent of mobile commerce, as
smartphones became a little more widespread and consumers could now shop anytime which
further boosted the growth of ecommerce1.

1
Simakov, V. (2020) “History of formation of e-commerce enterprises as subjects of innovative entrepreneurship”
Three Seas Economic Journal, 1(1), 84-90.

1
`

2.1.2 Consumer Behavior

Understanding consumer behavior is necessary in order to understand the dynamics of
ecommerce industry. There are several factors that contribute towards the preferences of the
consumers for online shopping rather than the traditional retail.
These include
 E-commerce offers convenience and unparalleled experience where consumers can easily
browse and select as well as purchase the product from the comfort of their homes which
further eliminates the need to visit the stores physically.
 Online platforms provide wide variety of services and products which is often sometimes
beyond the products available in the stores. This eventually caters to the consumer needs and
preferences.
 Consumers also appreciate the ability to compare the prices across different platforms which
enables them to make the decisions that are better for them so that they're able to find better
deals.
 Ecommerce platforms also provide product catalogs which also provides detailed information
regarding the items and this helps the consumers to make the well-informed decisions2.
 Online shopping also breaks geographical barriers as consumers can easily access the product
from all around the world and this experience is proven to be beneficial when searching for
unique items that are not already available in the local markets.

2.1.3 Future of the Industry

The future of e-commerce industry is far beyond the technological advancements and is highly
dependent on changing consumer expectations and the global marketing trends. The ecommerce
industry is continuously embracing technologies like artificial intelligence, augmented reality as
well as virtual reality in order to enhance online shopping experience of the consumers.
Ecommerce platforms also provide personalization experiences and recommendations according
to the marketing strategies thus providing more tailored shopping spree. The future of
ecommerce is highly dependent in seamless integration of online and offline channels which
further creates omnichannel experience for the consumers.Ecommerce companies are also

2
Taher, G. (2021) “E-commerce: advantages and limitations” International Journal of Academic Research in
Accounting Finance and Management Sciences, 11(1), 153-165.

2
`

incorporating sustainability prospects into their practices which further grows environmental
awareness regarding consumer preferences.

2.1.4 Global Reach

E-commerce has transcended beyond the boundaries which also enabled the business to reach a
global audience. The key strategies for global reach include adaptation of websites and
marketing strategies in order to understand the linguistic and cultural nuances of the regions 3.
The global reach of ecommerce has also evolved in building efficient and reliable logistic
networks that further facilitate the international delivery and shipping options. E-commerce
industry also engages with the global marketplaces in establishing the presence in the
continuously emerging markets in order to diversify the consumer base.

2.1.5 Technology in E-Commerce

Technological advancements play an important role in shaping ecommerce landscape as the
proliferation of smartphones has led to development of making mobile transactions which further
prompted the businesses to optimize their platforms in a much better way. Some ecommerce
platforms also explore blockchain technology in order to undergo transparent and smooth as well
as secure transaction4. Augmented reality and virtual reality are the technologies that are
thoroughly increasing the integrated and virtual try onsin order to ease the shopping experience.
AI power chat boards also provide personalized recommendations and enhance customer
satisfaction levels which further overall elevate the shopping experience of the consumers.

2.2 Advantage of E-Commerce

As it stands, the electronic commerce industry has changed considerably into a transformative
and pervasive force for businesses in the modern day. It offers contemporary commercial
businesses with an innumerable number of advantages relative to traditional operations in terms
of not only ease of doing business, but also with regard to engaging the everyday consumer in

3
Datta, P. (2011) “A preliminary study of ecommerce adoption in developing countries” Information systems
journal, 21(1), 3-32.
4
Sabou, S., Avram-Pop, B., & Zima, L. A. (2017) “The impact of the problems faced by online customers on
ecommerce” Studia Universitatis Babes-Bolyai Oeconomica, 62(2), 77-88.

3
`

their operations5. One of the most notable advantages of it takes the form of its global reach. In
an ever-globalizing world, the use of online platforms is becoming more and more critical for
businesses in terms of furthering their reach and presence across boarders thereby doing business
in markets outside of their home country. 6 Furthermore, electronic commerce affords businesses
with the ability to operate on a 24-hour basis thereby not only offering their services to
consumers at any time but also at any location. This is considerably more so advantageous than
traditional operations, which are limited to set operational hours thereby limiting the ability of
the consumer to make purchases from and interact with the business. Online platforms then
allow consumers to engage in commerce at any given moment regardless of the business’s own
schedule. This helps businesses operating across time-zones to seamlessly connect with the
consumer and ensure that their expectations and needs can be met.
Another notable advantage of electronic commerce is that of the cost efficiency that it affords
business operations. By eliminating the need for a traditional operation, a business is able to
considerably decrease the overall costs that it faces. This helps in not only streamlining the
operations of the business but also helps in reducing the overall costs thereby improving business
profitability. Herein, businesses, through the use of electronic commerce, businesses can
eliminate the need for maintenance, utilities, and rental costs. This can then help in reducing the
pricing of a given product thereby making the online business more so attractive to consumers
that traditional businesses.7 Moreover, electronic commerce’s digital nature helps with regard to
aiding businesses in conducting efficient and seamless commerce operations. This, essentially,
involves the elimination of physical processes such as cash transactions, documentation of
transactions and sales, and so on that are streamlined by way of digital infrastructure and
integrated payment platforms. Digital transactions are traceable and transparent, which thereby
helps ensure an environment of security and trust.8
Overall, electronic commerce’s transformative impact extends considerably beyond traditional
retail’s confines in of itself as it impacts various other sectors such as education, entertainment,

5
Al Tamer, M. (2021) “The advantages and limitations of e-commerce to both customers & businesses” BAU
Journal-Creative Sustainable Development, 2(2), 6.
6
Kumar, S., Lim, W. M., Pandey, N., & Christopher Westland, J. (2021) “20 years of electronic commerce
research” Electronic Commerce Research, 21, 1-40.
7
Escursell, S., Llorach-Massana, P., & Roncero, M. B. (2021) “Sustainability in e-commerce packaging” A
review. Journal of cleaner production, 280, 124314.
8
Alfonso, V., Boar, C., Frost, J., Gambacorta, L., & Liu, J. (2021) “E-commerce in the pandemic and beyond” BIS
bulletin, 36(9), 1-9.

4
`

services, and so on. The rise of online marketplaces such as Alibaba and Amazon has been key
in revolutionizing the sales of services and goods for SMEs to reach larger audiences than they
were previously able to.9
E-commerce acts as a catalyst for entrepreneurship and innovation. The ecosystem of digitization
gives a lot of opportunity for experimentation making businesses able to explore new
approaches, marketing strategies and business models. The agility provided by platforms of e-
commerce make it possible for businesses to adapt quickly to changing dynamics of the market,
using the power of real-time analytics and data to refine their products and improve the
experiences of their customers. This process which is iterative of innovation supports evolution
of companies, driving sustainability and competitiveness.
In the area of customer experience, e-commerce has brought upon a new age of customization
and personalization. Advanced analytics of data and algorithms of machine learning make it
possible for businesses to get insights into the purchasing patterns, behaviors and preferences of
the consumers. With access to this information, businesses are able to tailor their products,
messages of marketing and interfaces of users to create an experience that is engaging and
personalized for each individual customer. This customization level not only improves the
satisfaction of customers but also encourages brand loyalty, as customers are made to feel a deep
connection with the businesses that caters to their unique preferences and understands them.
The implementation of e-commerce has also been significant in reshaping dynamics of supply
chain. The shift from conventional models of supply chain to more responsive and agile systems
can be seen, with businesses utilizing technology to optimize the management of inventory,
logistics and order fulfillment. The implementation of artificial intelligence, robotics and
automation in distribution and warehouses centers improves efficiency, reduces the time of lead
and reduces errors in the process of fulfillment. This does not only prove advantageous to
businesses by making operations streamlined but also facilitates in creation of a more reliable
and seamless experiences for customers.
In the area of financial transactions, e-commerce has brought upon the evolution in the form of
payment systems and introduction of currencies that are digital. The invention of convenient and
secure gateways for online payment has reduced the reliance on conventional transactions using

9
Bhatti, A., Akram, H., Basit, H. M., Khan, A. U., Raza, S. M., & Naqvi, M. B. (2020) “E-commerce trends during
COVID-19 Pandemic” International Journal of Future Generation Communication and Networking, 13(2), 1449-
1452.

5
`

cash, giving customers many options such as cryptocurrency, digital wallets and credit/debit
cards. The joining of financial technology with e-commerce has not just improved the efficiency
and security of transactions but has also opened path for innovative services for the financial
industry, which includes digital banking, crowdfunding and peer-to-peer lending.
An implementation of e-commerce and social media, also called social commerce, represents
another facet of the landscape of e-commerce. Platforms of social media have evolved way past
mere tools of communication to become influential ways for discovery of products, product
purchase and recommendation. Businesses utilize social commerce to engage with customer,
show off their products and facilitate quick transactions directly within environments of social
media10. The connectivity of social media that is already present in their platforms improves the
social and interactive aspects of shopping, in the creation of a more community-driven and
immersive experience of shopping.
The obvious need for e-commerce is also highlighted by its adaptability and resilience,
particularly in the case of challenges that are unforeseen like the global pandemic of 2019. The
pandemic fastened the shift to online channels as social distancing and lockdown measures
limited interactions in the physical world. E-commerce posed itself as a lifeline for companies
that made them able to continue their operations and maintain connection with their customers
during times of economic emergencies.
In the future, the continued integration of e-commerce is anticipated to be transformed by
emerging technologies like virtual reality and augmented reality. These technologies have the
ability to transform the experience of online shopping by giving virtual capabilities of trying on
products for apparel, immersive displays of products and interactive environments of shopping.
As these technologies improve, there is a possibility that the gap between the online and physical
experiences of shopping may be lessened, improving the satisfaction and engagement of
customers.

10
Chen, C., & Lee, H. (2018) “Critical success factors and performance evaluation model for the development of the
urban public bicycle system” Asian Economic and Financial Review (online)
https://doi.org/10.18488/journal.aefr.2018.87.946.963

6
`

2.3 Impact on Various Sectors

Amazon and Alibaba are the ecommerce platforms that totally democratized access towards
global markets as it enables small and medium sized enterprises to get access to larger target
volumes than ever. The small medium enterprises can now easily compete with large
corporations and leverage the marketplaces online in order to show their products and services to
the world. This initiative has spurred innovation in entrepreneurship as SME’s are now provided
with an opportunity to experiment with latest approaches, business models and marketing
strategies according to the digital realm11. Implementation of ecommerce eventually reshapes the
supply chain dynamics towards agile systems and the businesses are thoroughly utilizing the
technology in order to optimize their inventory logistics as well as order fulfillment process.
Artificial intelligence automated systems and robotics are also being deployed in warehouse
sectors and distribution systems in order to enhance efficiency and reduce the errors. This on one
hand streamlines the operations and on other hand is responsible for creating seamless
experience for the users. E-commerce also brings evolution in the payment system as it
introduces digital currencies and secure online payment systems. Traditional cash transactions
are also replaced by digital payment methods which includes digital wallets, credit and debit
cards. Convergence of ecommerce as well as social media is known as social commerce and it is
becoming increasingly influential particularly in the online shopping landscape. Connectivity of
ecommerce websites to social media platforms enhance the interactions among the shopping
experience which ultimately creates a community-driven approach and provides a beneficial
shopping experience to the customers12. Businesses involve the use of social commerce in order
to actively engage with the customers and to showcase their products as well as facilitate
transactions within social media environments.

2.4 Resilience and Adaptability

Ecommerce demonstrate the resilience in the face of unforeseen challenges particularly during
COVID-19 pandemic when it was a time of crisis and physical stores were closed down

11
Nair, K. S. (2017) “Impact of e-commerce on global business and opportunities-A Conceptual Study”
International Journal of Advanced Engineering and Management Research 2(2), 324-336.
12
Urne, A. C. (2020) “Impact of E-commerce on Consumer Buying Behaviour: A Review of Existing
Literature” SaiBalaji International Journal of Management Science-A journal of Contemporary Research

7
`

ecommerce platforms provided an alternative and lifeline approach for businesses to continue
their operations. Companies adopted online channels in order to maintain their connections with
the customers and sustain their revenues. E-commerce platforms also enabled the businesses to
maintain their direct communication with the customers 13. The businesses involved the use of e-
mail marketing, personalized messaging, social media management and other aspects in order to
keep the customers informed about any changes in the operations, products as well as the
promotions. This communication is quite helpful for the businesses to strengthen the customer
relationships and build trust particularly during the times of difficulty or uncertainty which
ultimately fosters loyal and long-term connection. E-commerce platforms also played an
important role in supporting the remote workforces particularly during the pandemic and the
employees were easily able to access the tools relevant to the ecommerce sectors from anywhere
along with the use of an Internet connection and facilitated collaboration, productivity and
communication 14. More and more people started the new online shopping experience for the
basic essentials and ecommerce platforms adapted their offerings and fulfilled the procedures in
order to increase the demand. Different businesses involved the use of data analysis and
customer insights in order to anticipate the continuously changing and evolving trends to tailor
the needs and strategies accordingly. The things that posed as a challenge during the pandemic
accelerated the digital transformation of the ecommerce industry for many businesses and pushed
them to embrace this along with the use of the technologies at a faster pace 15. Companies that
previously were reluctant to adopt e-commerce recognized its importance during the times of
COVID-19 and maintained their integrity and continuity.

13
Nurdyawati, S. I. (2020) “Retail Resilience to The Emergence of E-commerce” Rijksuniversiteit Groningen
14
Onjewu, A. K. E., Hussain, S., & Haddoud, M. Y. (2022) “The Interplay of E-commerce, Resilience and Exports
in the Context of COVID-19” Information Systems Frontiers 24(4), 1209-1221.
15
Nathwani, D. “E-COMMERCE” Evolution 62, 9.

8
`

Chapter 3: Comparative Analysis

The online shopping is becoming very dominant force in the e-commerce sector and Amazon
and Alibaba are the industries which are shaping this landscape. The current comparative
analysis would identify multiple aspects of the both companies and would explore the histories,
the headquarters, the technology, services, products, employee count and much more.

3.1 Comparison of Companies

The comparison of Alibaba and Amazon can be distinguished as

3.1.1 Alibaba

Founded by. Alibaba is known as one of the global retailing giants into the technology and e-
commerce sector and was founded by Jack Ma in 1999. Jack Ma particularly the intrapreneur
who was very visionary who founded the business with the goal for creating the enhanced
platform which could connect multiple manufacturers of China with the ways international
players16.
Headquarters. The headquarter of Alibaba is situated in Hangzhou, Zhejiang, China. Hangzhou,
known as one of the landscapes for picturesque and innovation of technology which serves as
central hub for making. The strategic decision and the multiple operations at a global level.
Employees. Alibaba expanded their workforce which is 250,000 employees. The employees are
substantial based and the fast operation of the company and the multiple roles are the major goal
and vision for the technological industry.

16
Kumar, S., Lim, W. M., Pandey, N., & Christopher Westland, J. (2021) “20 years of electronic commerce
research” Electronic Commerce Research, 21, 1-40.

9
`

Technology. Alibaba is famous for most and the global innovation of technology and is
incorporating multiple solutions which are advanced in their operations. The company is placing
the emphasis on the e-commerce particularly the cloud computing and multiple digital media
platforms. Alibaba is highly committed for the innovation and is particularly the evident in its
efforts which are pioneering various areas including data analytics an unable to the company for
staying up to date and the landscape which is rapidly evolving based on the online retailing
industry.
Services. The services of Alibaba diversified and encompass multiple various ranges of the
digital economy. The company is considered as a powerhouse of the e-commerce and various
platforms including T-mall are also offering the enhanced range of their products to the
consumers. According to their preferences, furthermore, Alibaba Cloud, the cloud computing is
particularly considered as the force of the company which is providing reliable infrastructure to
cloud for the global business. The sector of entertainment is not particularly overlooked as
Alibaba is highly delivering their content digitally through multiple platforms like you.
Products. The products of Alibaba ranges from extensive range which cover the imaginable
category. Virtually Alibaba is offering multiple electronics and fashion-based products to the
home goods and beyond the limit and the facilities is based on the business to consumer and
consumer to previous consumer various transactions, the products are diversified which are
offering and contributing to the status of Alibaba as one of the top shops for their consumers and
their businesses.
Shops. Alibaba is operating multiple online marketplaces and is standing out example the
platforms are serving the marketplace at a virtual ever and is connecting multiple buyers and
sellers. The power has also enhanced the prominence as the largest retailing shopping destination
at a global level, the marketplace of Alibaba approaches do not only facilitates the transactions
between the consumers and business but also facilitates the platforms from small businesses and
the intrapreneurs individual in order to show cars. And sell the products and services17.
Logo. The iconic logo of Alibaba, particularly stylized by letter A, which seemed seat as it is
incorporated into the design. The choice of the simple reflects the vision of the Alibaba. It open
doors for multiple medium and multiple small size entrepreneurs. The symbol relates with the

17
Escursell, S., Llorach-Massana, P., & Roncero, M. B. (2021) “Sustainability in e-commerce packaging: A
review” Journal of cleaner production, 280, 124314.

10
`

commitment of the company for empowering multiple small business through providing the wide
access at a global market through their expanding platforms of e-commerce.

3.1.2 Alibaba History

Alibaba was founded by Jack Ma. It has the history which is very fascinating that particularly
traces the roots to the small apartment in China. The journey of the company is begun from the
platform for connecting the manufacturers of China to multiple international buyers towards a
global e-commerce and the platform of technology which is marked up by the innovation, the
expansion strategically and the commitment for empowering multiple businesses. Alibaba,
particularly founded in 1999 by Jack Ma with a group of various cofounders. The vision initially
of the company was to create the online platform which would facilitate the trading between the
manufacturers of China and various international buyers. Jack Ma was English teacher and was
recognised the potential for the Internet to the level for enhancing the field of small to medium
sized enterprises through providing the global marketplace.
Alibaba is the first platform majorly alibaba.com which was launched in 1999. Alibaba served
to business to business through multiple online platforms and connected the manufacturers of
China with various international businesses. For seeking the sources of products, the platform
particularly played a very important role in opening various opportunities for the manufacturers
at a small scale for assessing at the global market. Through building the success of alibaba.com,
the company particularly recognised the potential for the consumer-focused e-commerce.
Alibaba launched or poor in 2003 the consumer-to-consumer online market to up or became
quickly as a dominant force in the e-commerce landscape of China and offered multiple ranges
of products and services. Alibaba also introduced T Mall formerly Proper Mall in 2008. The

11
`

platform which particularly focused for connecting the large and the brands which are
established with the consumers team all particularly operates two business to consumer model
and allows various brands to set up online storefronts. This move solidified the position of
Alibaba as the e-commerce ecosystem comprehensively.
Through the recognizing the financial services into the ecosystem, Alibaba particularly launched
Alipay in 2004. The design initially was based on the services for various online transactions and
Alipay evolved the digital payment platform at a comprehensive level the success. This enhanced
the groundwork for the group. For expanding into multiple services of financial perspective and
included the payments of mobile, the management of logistics and various credit services.
Alibaba emerged into cloud computing in 2009 by launching Alibaba Cloud. Alibaba expanded
the expertise through managing the amounts of the data based on e-commerce platform, and
Alibaba Cloud became as one of the leading player in. cloud services at a global level and
offered various services which included the storage, computing and data analytics.
Alibaba particularly expanded themselves beyond the China by using investments at a strategic
level and accusations the company invested in various platforms of e-commerce at a global level,
which included in the Southeast Asia and India. The investment particularly helped to establish
Alibaba in the presence of various international markets. Alibaba emerged into the public sector
of New York Stock Exchange in 2014 as one of the largest public offerings in the history. The
IPO enhanced the billions of dollars and reflected into the confidence of market and the business
model of Alibaba and the growth potential level. Alibaba emerged continuously for innovation
diversified the business. The company particularly ventured their multiple areas including digital
in detainment, various logistics, and artificial intelligence. The investments in multiple
perspective including delivery of logistics also integrated the commitment of company for
creating the ecosystem, which is integrated and goes beyond the e-commerce platform. 18

18
Chen, C., & Lee, H. (2018) “Critical success factors and performance evaluation model for the development of the
urban public bicycle system” Asian Economic and Financial
Review,. https://doi.org/10.18488/journal.aefr.2018.87.946.963

12
`

3.1.3 Amazon

Founded by. Amazon was founded by Jeff Bezos in 1994. Jeff Bezos particularly started the
company with the best vision for enhancing the online platform, which would offer the selection
of various books at extensive level and leverage the potential growth of the Internet into the
global market.
Headquarter. the headquarters of Amazon are located in Seattle, WA, USA. The choice of the
Seattle of the organisations had got a particularly which reflects a repetition of the city for the
innovation and for the technology factors which played a very important role for the growth and
success of Amazon.
Employees. Amazon has more than 1.3 million employees into the global market. The workforce
is particularly distributed in multiple segments of business, which integrates the large scale and
the reach of the global operations of Amazon.
Technology. Amazon is integrating and is uplifting the innovation of technology and is
incorporating multiple advanced technologies in the operations of its business, The companies
particularly placing the emphasis on a significant artificial intelligence or machine learning and
robotics. The innovations are notable which includes the overall development of the
recommended algorithms, which personalise the experience of users, and Amazon Web Service,
which is a comprehensive platform of cloud computing and widely used by the global business
sectors.
Services. The range of Amazon services extends beyond the origins of the platform of e-
commerce. The company has diversified multiple sectors, which offers the services of e-
commerce, cloud computing, the digital streaming and artificial intelligence. The primary service
of Amazon is. E-commerce and is extensive based on the marketplace at online level and allows

13
`

multiple customers for purchasing the products at a wide range. By AWS Amazon particularly
provides services of cloud computing for the businesses and offers various solutions for the
computing power, the database and shortage. Amazon has a strong presence on the entertainment
industry digitally with the services of Amazon Prime Video and offers the vast. Movies of
library, The TV shows and original content, the Amazon artificial intelligence into creates the
services and enhance the experience of customers and optimised operations.
Products. The products of Amazon range based on multiple categories and integrates the
commitment of company from one stop shop for the consumers. The product categories of
Amazon include multiple books, electronics, clothing and groceries. The Company should focus
of Amazon is on the books for expanding for including into the collection extensively for
covering multiple generations. The electronic ranges from multiple gadgets to appliances.
Amazon also offers wide range of various electronic products. The fashion items of the clothing
bar based on all ages and all styles and I am available at Amazon through the services of
Amazon. The groceries can also be purchased based on Amazon Fresh and the companies
providing the platform for the crossing online purchasing19.
Shops. Amazon is operating as one of the largest marketplaces in the world. Amazon is selling
the various products and the platform is helping the third-party sellers for listing and selling their
products. This is also helping to contribute into the vast and diversified range of their offerings
which are available to the customers.
Logo. The local time zone particularly features an arrow which starts with and points towards
seem the iconic symbol of the companies highly committed for offering everything. Furthermore,
reinforced the main idea, add a comprehensive level and also in composite of marketplace.

19
Han, B. R., Sun, T., Chu, L. Y., & Wu, L. (2022) “COVID-19 and E-commerce Operations: Evidence from
Alibaba” Manufacturing & Service Operations Management, 24(3), 1388-1405.

14
`

3.1.4 Amazon History

Amazon is considered as one of the most influential and expanded company to the world and is
rich based on their history and reflects to the evolution from online bookstores towards the
global economy heads and a major key player into the industry. Amazon was particularly
founded by Jeff in 1994, the company has the beginning, which is very modest and operated
from the garage of Jeff in Washington. Basically, the purpose was to sell the books of multiple
selection and create the online marketplace. Initially the name of the company was introduced,
and this was based on the confusion of the getaway, and later it was changing to Amazon. This
was particularly inspired by the South American River and also emphasised the goal of the
company as one of the largest companies in the world20.
Amazon launched officially in 1995 as the bookstore at online level. The website also offered
the selection of multiple categories of books with millions of titles and significantly enhanced the
traditional brick and mortar bookstores. The innovation of the Amazons included various
features including review of customers and recommendations, and this quickly set apart from the
e-commerce world. Furthermore, Amazon also recognise the potential growth beyond the books
and rapidly expanded themselves by offering multiple products. The company diversified by
selling the music and the video in 1999 and further enhance the customer base. The introduction
was based on Amazon marketplace particularly in. 2000 allowed various third-party sellers for
offering the products on the platform and to contribute to the wide array of the available books.
20
Altrad, A., Pathmanathan, P. R., Al Moaiad, Y., Endara, Y. M., Aseh, K., El-Ebiary, Y. A. B., ... & Saany, S. I. A.
(2021) “Amazon in Business to Customers and Overcoming Obstacles” In 2021 2nd International Conference on
Smart Computing and Electronic Enterprise (ICSCEE) (pp. 175-179). IEEE.

15
`

Amazon is considered as one of the most influential and food front technological innovation by
the history. The company played very important role to become popular through e-commerce
and also pioneered various features including one click shopping, various recommendations, bad
personalised level and reviews of customers for them or Amazon also. Invested into the logistics
and fulfilment centres for streamlining the process of delivery and making sure the efficiency
and shipments. In 2000, Amazon expanded and recognised based on cloud computing and
launched Amazon Web Services. In 2006 this Amazon Web Service was launched and provided
the cost effective and most reliable infrastructure services of cloud and became as one of the
revenues which was significant for driver of the company. This also integrated the ability of
Amazon to diversify themselves and position themselves as one of the leaders in to the services
sector of technology.21
Amazon expanded their region in 2006 into the industry of entertainment and launched Amazon
Prime. The subscription service was initially offered for free two-day shipping. Based on the
purchases, which eligible by years, Amazon Prime also evolved. Include multiple range and also
included access to multiple services like Prime Video, various Prime music and also solidify the
presence of Amazon into the digital entertainment landscape. The growth of the Amazon was
accelerated by the acquisition strategically and also included the companies like Zappos and
Food Market. The company also enhanced himself at a global setup and entered into the market
through adapting services for catering the diversified needs of customers22.

3.2 Comparative Analysis

The comparative analysis of Amazon and Alibaba has been recognized through different
techniques which are mainly described as

21
Chen, C., & Lee, H. (2018) “Critical success factors and performance evaluation model for the development of the
urban public bicycle system” Asian Economic and Financial Review (online)
https://doi.org/10.18488/journal.aefr.2018.87.946.963
22
Xiao, Y., & Xiong, K. (2023) “Study of Alibaba's profit model from the perspective of supply chain integration
based on information technology and financial big data analysis” Proceedings of the 4th Management Science
Informatization and Economic Innovation Development Conference, MSIEID 2022, December 9-11, 2022,
Chongqing China (online) https://doi.org/10.4108/eai.9-12-2022.2327639

16
`

3.2.1 Online Shop Revenue

The online shop revenue of Amazon is the cornerstone and half of the business which
contributes towards the financial success significantly. Multiple factors particularly define the
shop revenue of Amazon online, the product diversity the third-party sellers, thousands of
subscriptions and the presence of international key players are the key factors. The vast and
diversified product of Amazon catalogue particularly spans virtually based on the category which
is imaginable including various electronics, books cross recent clothing, the selection attracts
extensively the customer base. Furthermore, the substantial part of revenue of Amazon comes
based on the third-party sellers which utilised the platform for reaching the audience at a global
level. Amazon discharging multiple fees of sellers for the services based on the fulfilment
advertising and storage and contribute towards the revenue. The revenue is boosted based on the
services of subscription and based on Amazon Prime. The Prime members are paying the fees of
subscription and are enjoying the benefits including free shipping, the access exclusively based
on digital content and special. Discount.

The online shop Revenue of Alibaba is considered as the powerhouse based on the e-commerce
of Chinese landscape. The key factors which shape the revenue of Alibaba include the e-
commerce platforms, the models of transaction, the e-commerce, Chinese dominance and
multiple cross-border trades. The revenue of Alibaba is dependent on their platforms of e-
commerce including to Ali Express. The platforms connect multiple buyers and sellers for
creating the marketplace at online level. The revenue model of company involves turning fee

17
`

and. multiple commissions which facilitated transactions based on buyers and sellers 23. This
highly includes the fees, the value added to multiple services which provide the business to the
platforms. Alibaba in the Chinese market is opening a strong position which is contributing
towards the online shop revenue. The platform of the company is integral based on the daily
lives of the consumers of Chinese and encompass based on the retailing digital entertainment.
Alibaba platform is international and Ali Express particularly caters to various consumers in the
world, which contributes towards online shop revenue beyond the Chinese market.

3.2.2 Ratios and Revenue

Amazon and Alibaba are particularly drive towards online shopping revenue and enhance the
size based on the trends of revenue to become larger on the global operations extensively and
diversify the ventures of business. The online shopping revenue of Amazon is highly distributed
based on the global scale and the strong presence based on the Western markets whereas Alibaba
strengths based on prominent of the Asian market specially in China. The revenue of Amazon is
not only dependent on e-commerce but has contributed towards cloud computing and streaming
at a digital level and multiple services, whereas Alibaba diversify and relies on the e-commerce
and their revenue.
23
Sadeeq, M., Abdulla, A. I., Abdulraheem, A. S., & Ageed, Z. S. (2020) “Impact of electronic commerce on
enterprise business” Technol. Rep. Kansai Univ, 62(5), 2365-2378.

18
`

3.2.3 Physical Shop Revenue

Amazon plays a very important role as a key player into physical retailing industry which has
been limited and their revenue based on the physical stores is minimal. As limited physical
presence available of Amazon and focus on the history being online retailing industry providing
cloud services, Amazon Web Services and digital entertainment. The company does not have the
network widespread based on the physical store as compared to the extensive presence online.
Amazon is particularly experimented the retailing concepts physically including Amazon Go
stores. The initiative particularly represents the small number of the world business. Amazon Go
particularly feature the technology of cashier lesson provides the technology driven experience
of shopping. That revenue based of the physical stores including the Amazon go is not the
contributor significantly for the overall revenue of Amazon when compared to the e-commerce
and cloud services of the business.24

Alibaba actively venture there multiple physical retailing shops and physical shop revenue. As a
component of the business, the supermarket and the physical training initiatives of Alibaba
which helps to integrate the online as well as offline experience of shopping and emphasise

24
Srivastava, S., & Misra, M. (2014) “Developing evaluation matrix for critical success factors in technology
forecasting” Global Business Review, https://doi.org/10.1177/0972150914523598

19
`

based on the blending of the physical digital retailing. The online to offline strategy based of the
Alibaba enhance the overall capabilities for enhancing the shopping experience at offline level.
The customers at the stores can particularly use the apps of mobile for transactions and
recommendations, which are personalised and multiple online features. The physical shop
revenue of Alibaba encompasses the sales based on the brick-and-mortar stores. As the e-
commerce industry remains the revenue driven and the integration of multiple physical stores of
the business model of Alibaba reflex towards the approach of broader level of retailing
industry25.

3.2.4 Ratios and Revenue

The composition of revenue of Amazon is based on the online retailing. The cloud service is an
entertainment at digital level. There is the physical store revenue also forms the minimal part of
the diversified Amazon business portfolio. Amazon is limited and focus on the Physical
Retailing Alliance with the emphasis at the history on the online commerce and innovation of
technology, with various initiatives including Amazon go serving as the experiments. Then the
revenue generators at primary level. The strategy of Alibaba involves integration extensively of
multiple online as well as offline channels. The physical shop revenue highly contributes
significantly and reflects the strong commitment for providing the consumers with the shopping
experience based on various different platforms.

3.2.5 Currency
Amazon is conducting the transaction at a financial level and reports in U.S. dollars USD. The
key points of usage of currency includes the global operations, the reporting, consistency and
conversion of international revenue. Amazon is operating in multiple countries in the world and
is providing the vast platform to the customers as well as to the sellers. Despite based on the
international reach, the company is standardising the reporting of the financial perspectives in
U.S. dollars. The use of USD currency makes sure the consistency of the report based on the
diversified operations and make sure it is easy for stakeholders and multiple investors and
analysts for interpreting the statements of financial perspective. Amazon also generates that
25
Schmuck, R., & Benke, M. (2020) “An overview of innovation strategies and the case of Alibaba” ScienceDirect
(online) https://doi.org/10.1016/j.promfg.2020.10.176

20
`

revenue in multiple currencies based on global operations, and the results of financial
perspectives are converted into USD for reporting.26

Alibaba is contacting the operations of Financial Perspective in Chinese, Yaun and

considerations are based on the roots in China, the market dominance of China and currency
risks. Alibaba was founded by Jack Myers, root of the Chinese market. The choice of the yuan is
the primary based on the reporting of currency which reflects the regions of company and
operations substantially in China, the dominance of Alibaba in the e-commerce of Chinese
landscape27. The extensive operations into the country for contributing towards the Chinese yarn
into the multiple financial operations significantly. As Alibaba is expanding into the global
market and the company is encountering the currency risks and multiple fluctuations in to the
significant part of the revenue which is generated based on the currencies other than the Jean.

3.2.6 E-commerce Dominancy

Amazon is considered as a dominant in the space of e-commerce and is particularly multifaceted.
The key element of Amazon is the approach of customer centric. The company particularly
prioritized experience of customer and offers the convenient and seamless platform for various

26
Qian, Z. (2021) “Comparative analysis on financial sustainable growth - Taking ALIBABA and JD as examples”
2021 2nd International Conference on Internet and E-Business (online) https://doi.org/10.1145/3471988.3472014
27
Zeng, M (2018) “Alibaba and the Future of Business” Harvard Business Review (online)
https://hbr.org/2018/09/alibaba-and-the-future-of-business

21
`

users in order to browse and to purchase and receive products. The features of introductions are
based on one click to order and to get the Prime membership with various benefits for shipping
at a faster time and to excess and get exclusive entertainment and contribute towards the loyalty
of customers, the efficiency of the logistics and the management of supplies and please a very
important role in the success of Amazon. The company has particularly invested in a heavy
amount for building the network extensively for the centres of fulfilment, the hubs of distribution
and delivery solutions. This helps Amazon to fulfil the orders in quicker and efficient way and
reinforce the overall reputation for the deliveries. Amazon’s products are diversified based on the
catalogue which is one of other factors based on the dominancy. The platform sells various
products and also hosts the third-party sellers by the marketplace of Amazon. The strategy
broadens the available products which have multiple range. Ann makes Amazon as the
consumers for one stop shop based on multiple categories.28
The dominance of Alibaba stems based on the facilitator rule of the transactions of e-commerce
and the context of China. The platforms of Alibaba are based on businesses and the consumers
which connects. They go systems which is thriving and multiple platforms of C2C, Tmall and
B2C. The platforms which provide collectively the range of products in a comprehensive way.
The strength of Alibaba is based on empowering the small to medium enterprises based on
Alibaba work on the business gets access to the market at a global level and enhance the reach
and various opportunities. The company particularly focused on various digitalization, the cloud
services and the services of financial aspects on the shop san, on the purchasing power through
multiple elements and are positioning themselves into the landscape of e-commerce industry.

3.2.7 Global Reach

The global reach of the Amazon is based on the expansion at the international level which is
used strategically the companies operating in multiple countries and regions and it’s tailoring the
services based on the market at a local level. The localization is based on extending the language
and the adjustments of currency and amazon is adapting their offerings of the products and
strategies of markets in order to align with the preferences of the culture. The company is highly

28
Xiao, Y., & Xiong, K. (2023) “Study of Alibaba's profit model from the perspective of supply chain integration
based on information technology and financial big data analysis” Proceedings of the 4th Management Science
Informatization and Economic Innovation Development Conference, MSIEID 2022, December 9-11, 2022,
Chongqing, China(online) https://doi.org/10.4108/eai.9-12-2022.2327639

22
`

committed towards operations based on cross borders and is highly evident based on the
investments and centers fulfilment in the world. This helps Amazon to manage efficiently the
inventory, the process of orders and. Timely provide the deliveries based on the borders. The
global reach is also enhanced by various services and the selling of the Amazon global allows the
business to reach their customers in the world through selling the international market.
Alibaba started as a platform of Chinese centric approach and successfully enhanced themselves
into the global level through Ali Express. Express particularly connects sellers of China with
various consumers internationally and offers multiple products and services at the competitive
prices. The strategy is particularly expanded which helps Alibaba to tap into the market which is
emerging and to establish the presence significantly outside the Chinese market. The global
success of Alibaba is based on the support of various partnerships and acquisitions and the
investments in multiple countries. The company actively solved for enhancing the network on
international sellers an enhanced. Collaboration which contributed based on the footprint at a
global level. Furthermore, the focus of Alibaba on the cross-border logistics and e-commerce
highly facilitated the expansion based on the diversified markets making Alibaba as one of the
global key players into the industry of e-commerce.29

3.2.8 Competitive Strategies

Amazon plays an important role in development of its ecommerce platform in order to enhance
shopping experience for the customers as well as the sellers. It provides the features of
personalized recommendations which makes navigation easy and secure payment options in
order to enhance customer engagement as well as the rates of conversion. On the other hand, it
places emphasis on its technological development and constantly innovates in order to meet the
evolving needs and requirements of the customers. The company integrates the use of advanced
technology like artificial intelligence as well as data analytics in order to provide best experience
and optimize its platform for sellers as well as the buyers 30. Amazon undergoes aggressive

29
Xiao, Y., & Xiong, K. (2023) “Study of Alibaba's profit model from the perspective of supply chain integration
based on information technology and financial big data analysis” Proceedings of the 4th Management Science
Informatization and Economic Innovation Development Conference, MSIEID 2022, December 9-11, 2022,
Chongqing, China(online) https://doi.org/10.4108/eai.9-12-2022.2327639
30
Jia, K., Kenney, M., & Zysman, J. (2018) “Global competitors? Mapping the internationalization strategies of
Chinese digital platform firms” ResearchGate (Online)
https://www.researchgate.net/publication/327026336_Global_Competitors_Mapping_the_Internationalization_Strat
egies_of_Chinese_Digital_Platform_Firms.

23
`

international expansion and established its operations in different countries and regions of the
world. The company adopts this business model according to the local market preferences as
well as regulations which further enables it to capture the share of the market and compete on
global level. Alibaba however has further expanded its presence beyond China through different
platforms like Ali Express and undergoes strategic investments in order to potentiate the business
and international markets. The company also tailors its approaches according to the target market
and leverages the partnerships in order to establish itself as a player of ecommerce 31.

3.2.9 Future Outlook

Amazon benefits from continuous growth in ecommerce market and focuses on the emerging
markets as well as the product categories. The company has investments in technology logistics
as well as international expansion position in order to capture the market share and drive its
revenue growth within the coming years. Alibaba is positioned according to the global shift and
focuses on the digital commerce and online shopping experience 32. The company highly focuses
on innovation, international expansion and development of ecosystem that promotes the change
in market dynamics and maintain its leadership in the ecommerce industry.
Amazon is continuously exploring the emerging technologies which involves the use of delivery
options through drone, voice commerce and cashier less stores which further enhance the
convenience and efficacy of the online shopping experience 33. The investments of the company
in these areas will further demonstrate its commitment to innovation and staying ahead of other
ecommerce businesses. Alibaba is also investing in cutting-edge technology like blockchain,
artificial intelligence as well as virtual reality in order to create new opportunities in the sector of
ecommerce. The company also focuses on technology driven solutions which highlights the
commitment to improvement and growth in the future.

31
Schmuck, R., & Benke, M. (2020) “An overview of innovation strategies and the case of Alibaba” ScienceDirect
(online) https://doi.org/10.1016/j.promfg.2020.10.176
32
Jelassi, T., Martínez-López, F. J., Jelassi, T., & Martínez-López, F. J. (2020) “The strategic approach of the
world’s biggest e-Tailing companies: Amazon and Alibaba” Strategies for e-Business: Concepts and Cases on Value
Creation and Digital Business Transformation, 467-500.
33
Yu, L. (2019) “E-Commerce Models, Players, and Its Future” In Advanced Methodologies and Technologies in
Digital Marketing and Entrepreneurship (pp. 193-204). IGI Global.

24
`

Chapter 4: Financial Comparison

This analysis is being conducted to compare different elements of profitability structure of both Ali Baba and Amazon by focusing on
its revenues, cost of revenue, general & administrative expenses as well as marketing and selling expenses. Apart from this, a
comparison of assets and liabilities for both companies has also been conducted in this part of analysis. The overall picture of overall
financial performance of both companies is given below 34; -
ALI BABA
Years Revenue in Cost of sales and General and Assets Liabilities Product
millions revenue in marketing administrative development and
(RMB) millions expenses in expenses in millions technology
(RMB) millions (RMB) expenses in
(RMB) million (RMB)
2013 34,517 9,719 3,613 2,889 48,713 50,843 3,753
2014 52,504 13,369 4,545 4,218 111,549 70,731 5,093
2015 76,204 23,834 8,513 7,800 255,434 97,363 10,658
2016 101,143 34,355 11,307 9,205 364,245 114,356 13,788
2017 158,273 59,483 16,314 12,239 506,812 182,691 17,060
2018 250,266 107,044 27,299 16,241 717,124 277,685 22,754
2019 376,844 206,929 39,780 24,889 965,076 349,674 37,435
2020 509,711 282,367 50,673 28,197 1,312,985 433,334 43,080
2021 717,289 421,205 81,519 55,224 1,690,218 606,584 57,236
2022 853,062 539,450 119,799 31,922 1,695,553 613,360 55,465
2023 868,687 549,695 103,496 42,183 1,753,044 630,123 56,744

Ali Baba Financials available at: https://finance.yahoo.com/quote/9988.HK/

34

Amazon Financials available at: https://finance.yahoo.com/quote/AMZN?.tsrc=fin-srch

1
`

Years Revenue in Cost of Sales and General and Assets liabilities Product
millions revenue in marketing in administrative development and
(Dollar) millions millions expenses in technology
(Dollar) (Dollar) millions (Dollar) expenses in
millions (Dollar)
2013 74,452 54,181 3,133 1,129 45,394 37,289 6,565
2014 88,988 62,752 4,332 1,552 54,505 43,764 9,275
2015 107,006 71,651 5,254 1,747 65,444 51,363 12,540
2016 135,987 88,265 7,233 2,432 83,402 64,117 16,085
2017 177,866 111,934 10,069 3,674 131,310 103,601 22,620
2018 232,887 139,156 13,814 4,336 162,648 119,099 28,837
2019 280,522 165,536 18,878 5,203 225,248 163,188 35,931
2020 386,064 233,307 22,008 6,668 321,195 227,791 42,740
2021 469,822 272,344 32,551 8,823 420,549 282,304 56,052
2022 513,983 288,831 42,238 11,891 462,675 316,632 73,213
2023 574,785 304,739 718,046 16,025 527,854 353,910 85,622

2
`

4.1. Comparing Revenues of Ali Baba and Amazon

Years Amazon Alibaba

2013 100 100
2014 120 152
2015 140 197
2016 167 230
2017 198 286
2018 229 345
2019 249 395
2020 287 430
2021 308 471
2022 318 490
2023 330 492
Average Annual Rate of Change 21 36
Index

Revenue Companrison Index

600

500
%age Change in Revenues

400

300

200

100

-
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Average
Annual
Rate of
Change
Index
Years

Amazon Alibaba

Analysis: It is observed that revenues for both Ali Baba and Amazon saw a fluctuating trend
where revenues stayed stable between 2013 to 2019 for amazon and declined in 2020 which
slightly increased in 2021 and fell again in 2022. On the other hand, Ali Baba witnessed declined
revenues in 2016 which slight stability witnessed until 2018 and then revenues falling again and
has not be able to regain stability until 2023.

1
`

Reasoning: Ali baba witnessed a decline in its revenues in 2022 due to weakened global
economy post COVID-19 pandemic as well as tightened regulations on Chinese companies
especially in USA 35. Whereas on the other hand, amazon witnessed a rise in revenues in the year
2020 due to pandemic when most of the consumers moved to online shopping platforms,
however, the consumer returned to physical markets after the pandemic was over causing a
decline in revenues and returning to its usual levels of pre-pandemic conditions36.

4.2. Cost to Revenue Comparison

Years Cost to Revenue - Ali Baba Cost to Revenue - Amazon

2013 28% 73%

2014 25% 71%
2015 31% 67%
2016 34% 65%
2017 38% 63%
2018 43% 60%
2019 55% 59%
2020 55% 60%
2021 59% 58%
2022 63% 56%
2023 63% 53%

35
Jane Zang (2023), Alibaba Breakup Begins With Spinoff of $12 Billion Cloud Arm available at:
https://www.bloomberg.com/news/articles/2023-05-18/alibaba-sales-growth-disappoints-with-chinese-
rebound-uncertain
36
Karen Weise (2021), Amazon’s profit soars 220 percent as pandemic drives shopping online. Available at:
https://www.nytimes.com/2021/04/29/technology/amazons-profits-triple.html

2
`

Cost to Revenue Ratio

80%
70%
Cost to Revenue Ratio

60%
50%
40%
30%
20%
10%
0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Years

Cost to Revenue - Ali Baba Cost to Revenue - Amazon

Analysis: Cost and Revenue comparison of both companies has revealed following patterns; -
i. The cost of revenue for Ali Baba has consistently increase over the given period
ii. Whereas cost of revenue for Amazon has continuously dropped between 2013 to
2022.
Reasoning: The rising cost of revenue for Alibaba is primarily due to rising logistics cost as well
as high inventory cost of new businesses started by Ali Baba. On the other hand, the cost of
revenue has been continuously declining due to slashing of over 27000 jobs and other significant
cost cutting strategies adopted by the company.

4.3. Sales and Marketing Expenses to Revenue Comparison

Sales and Marketing Expenses to Sales and Marketing Expenses to

Years
Revenue Comparison - Ali Baba Revenue Comparison - Amazon
2013 10% 4%
2014 9% 5%
2015 11% 5%
2016 11% 5%
2017 10% 6%
2018 11% 6%
2019 11% 7%
2020 10% 6%

3
`

2021 11% 7%
2022 14% 8%
2023 12% 12%

Sales Marketing Expense to Revenue

Comparison
Sales Marketing Expense to Revenues

11 22 33 44 55 66 77 88 99 1010 1111
16%
14%
14% 12%
11% 12%
12% 11% 11% 11% 11%
10% 10% 10%
10% 9% 8%
8% 7% 7%
5% 6% 6% 6%
6% 5% 5%
4%
4%
2%
0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Analysis: The comparison of sales and marketing expense to revenues of both companies has
revealed that; -
Years
i. The sales and marketing expense for Ali Baba has slightly fluctuated from 2012 to
Sales and Marketing Expenses to Revenue Comparison - Ali Baba
2023 with slightly stable pattern between 2015 to 2020 when company has increased
Sales and Marketing Expenses to Revenue Comparison - Amazon
its expenditure on account of sales and marketing from 2021 onward showing
company’s changing marketing strategies. Alibaba has caught up and may surpass
Amazon in advertising costs if the sharp rise in expenses keeps up, even though
Alibaba's ad spend is still much smaller than Amazon's 37.
ii. Whereas, Amazon has continuously increased its sales and marketing expenses which
depicts that company heavily relies on marketing activities to boost revenues. This
significant expenditure demonstrates Amazon's steadfast dedication to growing its

37
Lucia Laurer (2023), Amazon’s Soaring Advertising Costs Reach US$20.6 Billion, Outpacing Alibaba and
eBay available at: https://ecommercedb.com/insights/amazons-soaring-advertising-costs-reach-us-20-6-
billion-outpacing-alibaba-and-ebay/4559

4
`

client base, improving brand awareness, and investigating cutting-edge advertising

strategies38.

4.4. General Administrative Expense to Revenue Comparison

General Administrative
General Administrative Expenses
Years Expenses to Revenue
to Revenue Comparison - Amazon
Comparison - Ali Baba
2013 8% 2%
2014 8% 2%
2015 10% 2%
2016 9% 2%
2017 8% 2%
2018 6% 2%
2019 7% 2%
2020 6% 2%
2021 8% 2%
2022 4% 2%
2023 5% 3%

General Admin Expenses to Revenue Ratio

12%
10%
8%
Ratio

6%
4%
The comparison of general administrative expenses to revenue of both companies has revealed; -
2%
i. Analysis: The expenses for Ali Baba significantly decreased from 2013 to 2022 and
0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
the change has seen continuous downward
Years trend.

38
Ibit. General Administrative Expeneses to Revenue Comparison - Ali Baba
General Administrative Expeneses to Revenue Comparison - Amazon
5
`

Reasoning: This is mainly due to cost cutting approach adopted by the company on
account of administrative expenses which is mainly due to the significant rise in cost
of revenue of the company39.
ii. Analysis: On the other hand, these expenses for Amazon has consistently increased
from 2012 to 2022.
Ratio between Assets to Revenue
4
Reasoning: This is mainly due to rising payroll expenses of the company, however,
3.5 the company has recently cut large amount of jobs in order to control related costs.
3
2.5
4.5. Assets/Liabilities to Revenue Comparison
Ratio

2
1.5
1 ALI BABA
Years
0.5 Revenues to Assets Revenues to Liabilities
02013 1.41 1.47
2013
2014 2014 2015 20162.122017 2018 2019 2020 2021
1.352022 2023
2015 3.35 Year 1.28
2016 3.60 1.13
2017 3.20
Alibaba Amazon 1.15
2018 2.87 1.11
2019 2.56 0.93
2020 2.58 0.85
2021 2.36 0.85
2022 1.99 0.72
2023 2.02 0.73

AMAZON
Amazon Revenues to Assets Revenues to Liabilities
2013 0.61 0.50
2014 0.61 0.49
2015 0.61 0.48
2016 0.61 0.47
2017 0.74 0.58
2018 0.70 0.51
2019 0.80 0.58
2020 0.83 0.59
2021 0.90 0.60
2022 0.90 0.62
2023 0.92 0.62

39
Bloomberg report (2022), available at: https://www.business-standard.com/article/international/alibaba-
lays-off-nearly-10-000-employees-to-cut-expenses-amid-poor-sales-122080600729_1.html

6
`

Ratio Between Liabilities to Revenue

1.6
1.4
1.2
1
Ratio

0.8
0.6
0.4
The comparison
0.2 has revealed that; -
i. 0 The
2013 assets
2014to revenue
2015 ratio
2016 for2017
Ali Baba
2018witnessed
2019 a2020
sharp 2021
rise in 2015
2022 to 2023
2016 and
the consistently declined until 2021 and
Yearthen becoming stable for next two years. This

is due to Ali Baba’s strategy to repurchase its shares at 3% annual rate until 2027.
Alibaba Amazon

7
`

Whereas, Liabilities to revenue ratio has been slightly stable with minor decline over
the same period for Ali Baba 40.
ii. Amazon has witnessed sharp increase in asset to revenue ratio from 2015 to 2016
with continuous decline ever since and coming back to the same level of 2014 in
2022.
iii. On the other hand, the asset/liabilities to revenue ratios has witnessed similar trends
with consistently rising from 2012 to 2016 and then becoming stable 2019 to 2022.

Conclusion

Which platform is best for you will depend on your particular circumstances. Before choosing
which e-commerce site to utilize, you need to determine what you're going to sell.
Alibaba would be a better option if you wanted to sell globally because they have a larger global
footprint and a ton of international merchants with whom you could collaborate to sell your
goods. Ten offices have been opened by Alibaba throughout the years as part of its platform's
global expansion. This indicates a greater global footprint for Alibaba.
However, for merchants who would rather concentrate on selling only in the United States or
Canada and don't want to bother with putting up an internet store, the Amazon marketplace is
ideal. If you're not comfortable managing a business and would prefer that Amazon takes care of
all the shipping and returns, Amazon FBA is also a viable choice.
By look at the financials, we have observed that Ali baba has out performed Amazon in terms of
various ratios including its revenue index, cost to revenue and other cost parameters. Though
Amazon spends more money on marketing, Ali baba still incurs higher percentage of its revenue
on marketing.

List of References

40
Chelsey Tam (2024), Alibaba Earnings: Increased Investments Bring Uncertainty to Margins. Available at:
https://www.morningstar.com/stocks/alibaba-earnings-increased-investments-bring-uncertainty-margins

8
`

Al Tamer, M. (2021) “The advantages and limitations of e-commerce to both customers &
businesses” BAU Journal-Creative Sustainable Development, 2(2), 6.
Alfonso, V., Boar, C., Frost, J., Gambacorta, L., & Liu, J. (2021) “E-commerce in the pandemic
and beyond” BIS bulletin, 36(9), 1-9.
Altrad, A., Pathmanathan, P. R., Al Moaiad, Y., Endara, Y. M., Aseh, K., El-Ebiary, Y. A. B., ...
&Saany, S. I. A. (2021) “Amazon in Business to Customers and Overcoming Obstacles” In 2021
2nd International Conference on Smart Computing and Electronic Enterprise (ICSCEE) (pp.
175-179). IEEE.
Bhatti, A., Akram, H., Basit, H. M., Khan, A. U., Raza, S. M., & Naqvi, M. B. (2020) “E-
commerce trends during COVID-19 Pandemic” International Journal of Future Generation
Communication and Networking, 13(2), 1449-1452.
Chen, C., & Lee, H. (2018) “Critical success factors and performance evaluation model for the
development of the urban public bicycle system” Asian Economic and Financial Review(online)
https://doi.org/10.18488/journal.aefr.2018.87.946.963
Datta, P. (2011) “A preliminary study of ecommerce adoption in developing
countries” Information systems journal, 21(1), 3-32.
Escursell, S., Llorach-Massana, P., & Roncero, M. B. (2021) “Sustainability in e-commerce
packaging: A review” Journal of cleaner production, 280, 124314.
Han, B. R., Sun, T., Chu, L. Y., & Wu, L. (2022) “COVID-19 and E-commerce Operations:
Evidence from Alibaba” Manufacturing & Service Operations Management, 24(3), 1388-1405.
Jelassi, T., Martínez-López, F. J., Jelassi, T., & Martínez-López, F. J. (2020) “The strategic
approach of the world’s biggest e-Tailing companies: Amazon and Alibaba” Strategies for e-
Business: Concepts and Cases on Value Creation and Digital Business Transformation 467-500.
Jia, K., Kenney, M., & Zysman, J. (2018) “Global competitors? Mapping the internationalization
strategies of Chinese digital platform firms” ResearchGate (Online)
https://www.researchgate.net/publication/327026336_Global_Competitors_Mapping_the_Interna
tionalization_Strategies_of_Chinese_Digital_Platform_Firms.
Kumar, S., Lim, W. M., Pandey, N., & Christopher Westland, J. (2021) “20 years of electronic
commerce research” Electronic Commerce Research, 21, 1-40.
Lai, G., Liu, H., Xiao, W., & Zhao, X. (2022) ““Fulfilled by amazon”: A strategic perspective of
competition at the e-commerce platform” Manufacturing & Service Operations
Management, 24(3), 1406-1420.
Nair, K. S. (2017) “Impact of e-commerce on global business and opportunities-A Conceptual
Study” International Journal of Advanced Engineering and Management Research 2(2), 324-336.
Nathwani, D. “E-COMMERCE” Evolution 62, 9.
Nurdyawati, S. I. (2020) “Retail Resilience to The Emergence of E-commerce” Rijksuniversiteit
Groningen
Onjewu, A. K. E., Hussain, S., & Haddoud, M. Y. (2022). “The Interplay of E-commerce,
Resilience and Exports in the Context of COVID-19” Information Systems Frontiers, 24(4),
1209-1221.

9
`

Qian, Z. (2021) “Comparative analysis on financial sustainable growth - Taking ALIBABA and
JD as examples” 2021 2nd International Conference on Internet and E-Business (online)
https://doi.org/10.1145/3471988.3472014
Sabou, S., Avram-Pop, B., & Zima, L. A. (2017) “The impact of the problems faced by online
customers on ecommerce” Studia Universitatis Babes-Bolyai Oeconomica, 62(2), 77-88.
Sadeeq, M., Abdulla, A. I., Abdulraheem, A. S., &Ageed, Z. S. (2020) “Impact of electronic
commerce on enterprise business” Technol. Rep. Kansai Univ, 62(5), 2365-2378.
Schmuck, R., & Benke, M. (2020) “An overview of innovation strategies and the case of
Alibaba” ScienceDirecct (Online) https://doi.org/10.1016/j.promfg 51, 1259-1266.
Schmuck, R., & Benke, M. (2020.) “An overview of innovation strategies and the case of
Alibaba” ScienceDirect (online) https://doi.org/10.1016/j.promfg.2020.10.176
Simakov, V. (2020) “History of formation of e-commerce enterprises as subjects of innovative
entrepreneurship” Three Seas Economic Journal, 1(1), 84-90.
Srivastava, S., & Misra, M. (2014) “Developing evaluation matrix for critical success factors in
technology forecasting” Global Business Review
(online) https://doi.org/10.1177/0972150914523598
Taher, G. (2021) “E-commerce: advantages and limitations” International Journal of Academic
Research in Accounting Finance and Management Sciences, 11(1), 153-165.
Urne, A. C. (2020) “Impact of E-commerce on Consumer Buying Behaviour: A Review of
Existing Literature” SaiBalaji International Journal of Management Science-A journal of
Contemporary Research
Xiao, Y., & Xiong, K. (2023) “Study of Alibaba's profit model from the perspective of supply
chain integration based on information technology and financial big data analysis” Proceedings
of the 4th Management Science Informatization and Economic Innovation Development
Conference, MSIEID 2022, December 9-11, 2022, Chongqing, China
(online) https://doi.org/10.4108/eai.9-12-2022.2327639
Xiao, Y., & Xiong, K. (2023) “Study of Alibaba's profit model from the perspective of supply
chain integration based on information technology and financial big data analysis” Proceedings
of the 4th Management Science Informatization and Economic Innovation Development
Conference, MSIEID 2022, December 9-11, 2022, Chongqing, China
(online) https://doi.org/10.4108/eai.9-12-2022.2327639
Yu, L. (2019) “E-Commerce Models, Players, and Its Future” In Advanced Methodologies and
Technologies in Digital Marketing and Entrepreneurship (pp. 193-204). IGI Global.
Ali Baba Financials available at: https://finance.yahoo.com/quote/9988.HK/
Amazon Financials available at: https://finance.yahoo.com/quote/AMZN?.tsrc=fin-srch
Zang, Jane (2023), Alibaba Breakup Begins With Spinoff of $12 Billion Cloud Arm available at:
https://www.bloomberg.com/news/articles/2023-05-18/alibaba-sales-growth-disappoints-with-chinese-
rebound-uncertain
Weise, Karen (2021), Amazon’s profit soars 220 percent as pandemic drives shopping online.
Available at: https://www.nytimes.com/2021/04/29/technology/amazons-profits-triple.html

10
`

Laurer, Lucia (2023), Amazon’s Soaring Advertising Costs Reach US$20.6 Billion, Outpacing
Alibaba and eBay available at: https://ecommercedb.com/insights/amazons-soaring-advertising-
costs-reach-us-20-6-billion-outpacing-alibaba-and-ebay/4559
Bloomberg report (2022), available at:
https://www.business-standard.com/article/international/alibaba-lays-off-nearly-10-000-
employees-to-cut-expenses-amid-poor-sales-122080600729_1.html

11
`

Statutory Declaration

I assure that this is a result of my personal work and that no other than the indicated aids have
been used for its completion. Furthermore I assure that all quotations and statements that have
been inferred literally or in a general manner from published or unpublished writings are marked
as such. Beyond this I assure that the work has not been used, neither completely nor in parts, to
pass any previous examination.

Date Signature

12