In the European market, Amazon and Alibaba Group are about to confront each other.
Editor’s note: This article comes from Tencent Technology , review / Cheng Xi.
Strategy:
1. Alibaba’s goal is to obtain 2 billion shopping users worldwide. The rapid development of AliExpress in Europe will threaten Amazon online stores.
2. Different business models make Alibaba a dangerous cloud computing competitor for Amazon because it is willing to bear larger losses to “damage” Amazon’s core profit engine.
3. In addition to Europe, Amazon and Alibaba are about to start a “collision” in Southeast Asia.
Amazon is the world’s largest e-commerce company, and Alibaba is a big local e-commerce player in China. Although they are in the same industry, Amazon and Alibaba are not incompatible (similar to Samsung in the high-end mobile phone field). Electronics and Apple). However, according to the latest news from foreign media, in the European market, Amazon and Alibaba Group are about to confront each other.
Business structure of the two giants
According to foreign media reports, Alibaba’s e-commerce, mobile payment and cloud computing businesses are mainly focused on the Chinese market. Although Alibaba dominates China’s online retail market, so far, the internationalization of its e-commerce business has not achieved significant success. In the past, Alibaba’s e-commerce platform built in the United States closed after a year of operation. In India, Alibaba supported Indian mobile payment company Paytm (a company that already controls) and launched a retail platform, but it was too late to enter. Full strength to compete with Amazon and Wal-Mart two Indian market monopolists.
Amazon is a company with a more international perspective, whether it is online retail, cloud computing, or online video, online music, physical zeroFor sale, Amazon has a footprint all over the world.
Surprisingly, Amazon has not been successful in China’s highly competitive e-commerce market. Previously, Amazon has shrunk many businesses, but is still running some successful businesses, such as digital reader Kindle and digital books.
However, the European market has become a common goal for the two giants to expand their markets. Among them, Alibaba believes that Europe is its primary goal of expanding beyond China. This expansion includes the launch of AliExpress and Alibaba’s cloud computing services in Europe, which may form a showdown with Amazon’s online store and cloud computing business in the near future.
Impact on Amazon
Alibaba launched AliExpress in 2010 as a cross-border e-commerce platform. It initially focused on business-to-business, allowing Chinese companies to sell products to international buyers, but the platform has gradually expanded to include business-to-consumer and consumer-to-consumer transactions.
AliExpress becomes one of the largest e-commerce markets in Russia and one of the largest websites in Brazil. Alibaba launched AliExpress in Europe last year to maintain this momentum, initially focusing on Spain, Italy and Turkey. In August last year, Alibaba Group also opened its first physical store in Madrid, Spain, displaying about 1,000 products from 60 brands.
In order to attract sellers, AliExpress actively reduces seller fees and directly charges Amazon’s third-party seller fees. This move convinced department store chain giant El Corte Ingles to open a store on AliExpress, but front-line clothing brands such as Mango and Benetton rejected Alibaba’s platform.
However, Alibaba’s expansion strategy is likely to continue as the company believes that acquiring overseas shoppers will help it reach more than one billion global active shoppers by the end of fiscal 2024, and Doubled to 20 billion people by 2035. That’s the size of Facebook’s social network active users today (the total number of users of its four major social tools).
According to Gartner, a technology market research firm, Alibaba has adopted a similar strategy for its cloud computing business, which ranked second only to Amazon and Microsoft in 2018, (but only Amazon Or a fraction of Microsoft). To challenge its European competitors, Alibaba offers free trials and double-digit annual membership discounts for cloud computing customers.
The company currently has only two data centers in Europe, which are located in Frankfurt, Germany and London, UK. In contrast, Alibaba operates nine data centers in China.
However, Alibaba’s cloud computing business has begun to expand overseas, with two data centers in the United States and separate data centers in the Middle East, Japan, and Australia. This number will continue to rise.