Two retail companies that monopolize both China and the United States are using their own advantages to “tax” other companies
Ma almost almost become the boss of the global retail industry.
On September 19, the market capitalization of Alibaba reached 457.9 billion U.S. dollars, only 6.6 billion U.S. dollars behind Amazon.
However, Ma has not been able to catch up with Bezos. Since then, the North Korean nuclear crisis, the Fed rate hike issues and other events, the United States stocks down. Alibaba, Amazon also failed to survive.
Amazon rebounded faster thereafter, expanding the market gap between itself and Alibaba to 18.3 billion U.S. dollars.
This catch-up rush may make it easy for people to ignore the fact that Alibaba.com, when it went public in 2014, is already more than $ 300 billion more than Amazon and more than $ 100 billion from Amazon.
At the beginning of listing in 2014, investors are optimistic about Alibaba for a number of reasons, such as its near-monopoly control over China’s electricity supplier market and Alipay’s control over mobile payments. This expectation also makes Alibaba the largest IPO in US history.
Amazon was experiencing the fiasco of the Fire mobile phone and massive losses for two consecutive quarters, investors sell stocks. However, a year later, the market capitalization of the two companies showed the opposite trend.
2015 Bezos Announces Cloud Computing (AWS) Performance. The business is the key to Amazon’s profit or stop loss, and Bezos also persuaded investors to give up short-term gains again in support of continuing to burn. Its stock price rose rapidly, driving the company into the top five global market cap.
Another challenge that Alibaba experienced in 2015 was that investors did not believe the transactions between Lynx and Taobao reflected the health of the company because its revenue and profits were not the same behind double-digit highs increase.
By the beginning of this year, the market capitalization of Alibaba is 240 billion U.S. dollars, while Amazon still has 1.66 times its market capitalization.
By midyear, Alibaba has issued a series of high-growth expectations about the company’s revenue. Wall Street believed the above rhetoric. The stock price rose 5% on that day. One view is that Alibaba is a representative of China’s rapid middle class growth, and the impressive spending power of these people can eventually translate into the beautiful figures in its earnings.
This is expected to promote Alibaba stock prices continue to rise. The two battles between companies that have similar ways of making money and dominating the company will continue.
Alibaba and Amazon are the largest electricity providers in their respective markets, but they are essentially taxing the retail industry
Alibaba and Amazon look more like retail companies. This is indeed the case from the revenue structure, 85% of Alibaba’s revenue comes from the business of e-commerce, while Amazon’s share is more than 90%.
However, there is another view about the business models of these companies: they are drawing up or taxing a whole industry.
The earliest person to make that claim was Chamath Palihapitiya, CEO of investment company Social Capital. Paribacibia, a likely choice-maker, joins the company as a senior at AOL and Facebook, respectively, in return for the company’s soaring stock value after it goes public.
When he was asked, “If you want to spend all your money on a stock and for ten years, who will choose,” Paribaciati’s answer is Amazon.
In his opinion, Amazon is essentially building an infrastructure that allows other companies to rely on it and pull it out. Paribu Abbiati summed it up as a tax that Amazon levies on other companies.
It’s like the government building an expressway for vehicles that pay for the tolls. Or like the power plant to produce electricity, and then delivered through the power grid to all households, users only need to pay to buy electricity, do not buy your own generator.
An important reason that Alibaba and Amazon can do this is that they each monopolize the markets of China and the United States. Alibaba’s market capitalization is eight times that of its biggest competitor, Jingdong. Amazon’s market capitalization is 2 times that of Wal-Mart, which has long been considered the world’s largest selling company.
They control the e-commerce traffic after the monopoly market, consumers and businesses do not have a better place to go. In the process of providing services, Alibaba and Amazon do not provide logistics directly, but provide complete logistics docking.
For example, Amazon built many years of warehouses, collection and delivery of the entire set of processes leased to the platform business, and now third-party electricity supplier sales accounted for half of Amazon’s total sales.
Alibaba is also doing logistics, in another way. In 2013, it spent 5 billion yuan to establish a logistics subsidiary rookie logistics, to attract partners to manage, in an attempt to improve Taobao, Lynx widely criticized the logistics experience.
Monopoly advantage recently extended to offline retail. Alibaba is transforming private convenience stores on the street, with shop owners paying $ 3,999 a year for technical services and ordering a certain amount of goods from Alibaba.
E-commerce is the main revenue of the two companies, are also the biggest driver of growth
September 20, 2014, Alibaba market, the day closing market value reached 231.44 billion US dollars. It not only surpassed Tencent, Baidu, more than Facebook and Amazon, becoming the world’s second-largest Internet company.
The electricity supplier business, which is dominated by the Chinese market, holds up Alibaba’s market capitalization. Looking ahead 12 months in June 2014, Ali’s seven e-commerce platforms achieved a total annual transaction volume of 1.83 trillion yuan in China, up from all other major competitors – including Amazon, JD.com and eBay – More.
At that time, at least 1/3 of Chinese Internet users in Taobao, Lynx to buy things. Alibaba defines these people as active buyers, who place an average of 52 orders per person per year.
But after Alibaba’s electricity supplier and stock prices have experienced a serious decline. FY15 (April 1 to March 31) The revenue growth of Alibaba dropped from 52% to 45%.
Alibaba replaced CEO, Zhang Yong succeeded Lu Zhaoxi. High-level executives, including Jack Ma, also continued to grow their company’s performance and future growth. However, second-quarter 2015 results show revenue up 28% YoY and China retail sales up 34%. Both of these key indicators are below the consensus of previous analysts and the slowest in three years.
Wall Street disappointment was almost at its peak at the time: they kept selling Alibaba shares cheap. Until August 2015 Ali shares fell below the issue price of 58.16 US dollars. The company’s market value of more than 40% impairment.
Starting from 2016, Alibaba started to make content and recommended channels through the micro-Amoy (Weibo and WeChat public numbers), invite everyone (consumer communities), invite Taobao stores, partners or write articles or videos to recommend products, Extract from commission. Through the content, Ali tries to keep people and turn them into what it wants to say.
One year, Taobao + Lynx e-commerce revenue increased 45% to 138.8 billion yuan.
Amazon Although the e-commerce business around the world, but its largest source of income is the United States local e-commerce business, the international business is still at a loss.
Its e-commerce business in the United States has no competitors, the current Americans spend 100 online shopping, there are 43 to the Amazon. And US e-commerce is still driving the company’s performance and profits, supporting the loss of global e-commerce business.
So you can clearly see that Amazon has a steep rise in revenue curve, but profits are always hovering at zero axis.
Their user shopping stickiness is also more solid
Both platforms each have a sufficiently large user stickiness.
As people rely more on computers, forms such as search or homepage shows are an important way to engage users.
But after the mobile phone became the most important personal belongings, consumers are shopping more directly to open the shopping application instead of searching the web.
This also means that leading companies are getting ahead.
Alibaba relies on content marketing such as socializing and shopping guides to keep people. According to Zhang Yong, CEO of the company, 2016, after Taobao added social functions, it was opened seven times a day.
This stickiness can be converted into consumption. In the second quarter of this year, Ali’s per capita contribution to income increased from 202 yuan to 273 yuan.
When users’ spending habits are cultivated, Alibaba brings a rise in revenue on such a large scale as double 11 without incurring high costs.
Even in the “6 · 18” promotion of Jingdong, the cost of Alibaba is still lower.
Amazon has been as much income as possible into new business, so the amount of profits is always low. It’s user stickiness is more reflected in the membership service: now more than half of users dig $ 99 a year as a Prime member, access to free two-day delivery courier service.
As Guggenheim Securities analyst Robert Drbul estimates, Amazon has about 65 million paying members. John Blackledge, an analyst at Cowen & Co., calculates more of the world’s subscribers, for a total of nearly 80 million.
Amazon 5-8 days the slowest delivery fee of 5 dollars, Prime users if you fancy free postage, one year to buy more than 20 orders in return.
This figure means that nearly half of American online shopping users promise to buy 20 things in Amazon within a year.
In fact these people may buy more. One study said Prime members spend 2-3 times more money on Amazon than average users.
Alibaba is not as fast as Amazon in opening up new businesses
There is no doubt that Amazon is the world’s largest provider of cloud computing, with more than 30% of the market share of the market, two or three Microsoft and Google add up and no more.
This is outside the relay business, Amazon envy another adversary business.
Bezosia had kept the data of the business behind complicated reports for the first time and no one knew how much it did and whether it was making money. In the first quarter of 2015, Amazon reported its first AWS performance, accounting for only 6% of revenue, but more than any other business.
Nobody thinks AWS can make that money. The day the figure was released, the market value of Amazon surged 25.6 billion U.S. dollars. After that, it was distributed with the US E-commerce providers and became the source of Amazon’s profits, a steady stream of blood transfusions for its huge investment in Europe, India and logistics.
Another Amazon started a promising new business is Echo smart speakers. Today is the company’s new $ 1 billion business. Last year’s Thanksgiving, Christmas and Prime Members Day promotions this year, Echo products sold the most.
Investment firm Mizuho expects Echo hardware sales and the built-in Alexa software voice assistant service to bring $ 11 billion in revenue to Amazon by 2020.
Today, the major technology companies have tried to smart speakers as the entrance.
The revenues from these technology businesses have driven Amazon’s $ 5 billion into the Indian market.
Alibaba’s cloud computing investment time and intensity are ahead of other large Chinese companies. In 2009, Aliyun operated as an independent subsidiary.
Since 2015, Aliyun’s revenue has maintained a three-digit increase in almost every quarter. Although the loss has been reduced to 4%, but still at a loss.
This is still in the policy of protection, blocking the overseas cloud computing competitors into China.
As announced in the second half of last year, the big entertainment group has now lost a total of 4.8 billion yuan. It goes on to enter the game industry will compete directly with the world’s largest game player Tencent. The latter has spent billions of dollars on a global acquisition of game production and distribution companies.
Both companies are also entering the offline retail business
From shopping malls to fresh supermarkets and convenience stores of all sizes, the physical businesses that the e-commerce operators tried to replace did not disappear, but instead became partners in e-commerce.
Alibaba faster than this point on the Amazon.
Not counting the million (expected) convenience stores that are still on the rise, Alibaba has partnered with hundreds of offline supermarkets and convenience stores through acquisitions and partnerships.
In August 2015, Alibaba announced a total of 28.3 billion yuan into Suning, becoming the latter’s second shareholder. Suning also spent 14 billion yuan to subscribe for new shares issued by Alibaba. To spend more than 10 billion yuan in mutual funds, Suning, Ali can show the importance of cooperation between each other.
There are a few tens of billions of level investment, Ali choose to own their own industry-leading companies are not good, to “fill” – which of their own product supply chain construction deficiencies, lack of experience, what to invest.
For example, nearly 200 billion privatization Intime, announced with Brilliance strategic cooperation. After online and offline competition from Jingdong, Alibaba.com is looking for the next way to entice consumers to spend money.
And recently Lynx convenience store to do, in essence, is looking for an entrance to the wholesale business, to find a new channel in 2345 line cities.
Similarly, in order to seize the group of people who do not have the habit of consuming food online, Alibaba opened a new box.
Because whether it is seafood, or more common fruits, vegetables, meat, the user in the electricity business page to see what and often get the last will be different. Existing cold chain delivery is not enough to give consumers enough trust in buying fresh produce online.
Market for Alibaba this attempt to basically positive attitude.
In July of this year, unmanned retail stocks in China’s A-share market jumped on the news that no one supermarket in Alibaba was about to open. For example, the transaction started less than five minutes on July 5, and the price of newly opened stock rose by 9.98%. Shen Si Electronics, Branch Blue software, Midea Electronics, Transmission Technology and other companies have the same concept of a 10% increase to close.
However, this rise may also be related to the A-share investment environment, they like chasing hot spots. As long as hot-related companies, will be sought after, no matter whether a giant into the market after the company will not benefit.
Amazon has a similar attempt, a little slower, but made a huge investment after it decided to move in that direction.
It was originally scheduled in 2014 to open a physical store in downtown Manhattan, New York, shoulder the responsibility of brand promotion, return, mini-warehouse. But when it opened in 2015, it was a small distribution center hiding in an office building opposite the Empire State Building, not a store or convenience store.
Amazon involved in fresh, food, daily necessities street convenience store, has been doing experiments, but the store’s shape is not fixed.
Until July this year, Amazon spent 17.7 billion US dollars to buy Whole Foods. The deal is the largest acquisition Amazon has ever made and the fourth-largest deal in U.S. retail history. Amazon, which owns Whole Foods’ 460-plus stores, became the nation’s fifth-largest grocery retailer.
After the announcement, Wal-Mart, Kroger, Oxfam and other major US supermarket chains plummeted.
The market is worried that after Amazon defeated them online, they tried to defeat them all over the mass purchases. In the retail market, Amazon wants to become the main seller of goods, no matter how consumers buy in the future.
A similar thing happened again last week.
CNBC reported last Friday that Amazon will decide before Thanksgiving whether to enter the multi-billion-dollar prescription drug market. This is just a Amazon business is still considered, but enough for Walgreens, CVS, Rite Aid and other drug stores plunged about 5%.
In short, the largest big company is growing
Today, the top 10 companies in the world, seven are technology companies.
Each company monopolizes a market. Except for Alibaba and Amazon, Apple is a high-end hardware company. Google Monopoly Search, Microsoft’s basic monopoly for software services, and Facebook and WeChat respectively monopolize social networks in two worlds.
In addition to the Chinese electricity supplier, payment platform, Alibaba’s influence is also reflected in its holdings of a large number of shares of listed companies. In fact, if you count these investments and their holdings of ants gold clothes, its overall valuation has surpassed Amazon.
These huge lead-ups make it possible in most cases for the rise of new companies to consolidate their leadership positions.
Geoffrey G. Parker, a professor of business at Tulane University, said, “To a certain extent, much of the R & D cost is borne by companies other than the technology giants, which allows them to make more Good product development. ”
Subversion of them has become more and more difficult.