the global competition of amazon and alibaba …...the global competition of amazon and alibaba...

Business Model Innovation (Fast fact series)

Management Theories and Business ModelsWinnie Lo, Iris Tong

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September 2018

The global competition of Amazon and Alibabathrough investment

Key highlights

• Both giants eye on emerging e-commerce markets, e.g. India, Middle East, Southeast Asia, etc. A head-to-head competition in India is expected

• In the latest 20 months, their investment programs in the global market are slightly different.

• Amazon mainly bets on the Indian market, investing on e-commerce, financial, insurance and transportation sectors.

• Alibaba has a more diverse global expansion plan, including the US, Europe, Middle East, India and Southeast Asia. Most of their funds are going to India’s e-commerce companies and the high-tech companies in the US.

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• Amazon and Alibaba are the largest e-commerce companies in the world

• Amazon adopts a hybrid strategy of organic growth and acquisition; while Alibaba mainly serves as a platform and extends its ecosystem via investment

• Both of them believe data is the new asset in the Internet era and heavily invested on cloud computing services and data analytics in their home country

• Alibaba was far more aggressive than Amazon, regarding the number of acquired/ invested companies in the past 20 months (January 2017-August 2018). The former invested in 59 companies, while the latter funded 20 companies

Basic background

Who are they?

Amazon, a dominant e-commerce player in North America and Europe

The company was founded by Jeffrey P. Bezos in July 1994, headquartered in Seattle, USA

Alibaba, the largest e-commerce company in China

The company was founded by Jack Ma in April 1999, headquartered in Hangzhou, China

Picture source: InternetSource: Company websites, Internet, compiled by Fung Business Intelligence

4

Key milestones

Icon source: InternetSource: Company websites, Internet, compiled by Fung Business Intelligence

5

1994

1997

1998

1999

2000

2002

20032004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Amazon incorporated

Announced IPO, started trading on NASDAQ under "AMZN”

Launched the first two international sites (the UK and Germany)Alibaba incorporated

Launched the first Asian site (Japan)

The Group announced that Jack Ma will step down in September 2019, and appointed Daniel Zhang to succeed Jack Ma as chairman

Launched the last-mile delivery service

Acquired a high-end supermarket chain, Whole Foods - Unveiled Hema supermarket, an example of the “New Retail” model- First overseas eWTP hub went live in Malaysia

- Launched private label site, Taobao Xinxuan

Launched Amazon Web Services

Introduced Amazon Prime

Launched Amazon Fresh

Announced expansion of Amazon Web Services into Asia

- Launched Kindle- Amazon Web Services announced global rollout of Amazon Virtual Private Cloud

Unveiled drone delivery plans for first time under 'Prime Air' name

- Launched the robotic fulfillment system with full-scale deployment - Developed Amazon Alexa

- Launched Amazon Business- Launched the first Amazon bookstore in Seattle

- Completed first drone delivery in UK- Launched the first semi-automated grocery store, AmazonGo

Launched Taobao MarketplaceLaunched Alipay

IPO on the Main Board of the Hong Kong Stock Exchange, HKSE

Launched Tmall

Established Alibaba Cloud

Launched Mobile Taobao App

Completed privatization from the HKSE

Established Cainiao Network- Launched Tmall Global- Went public on the New York Stock Exchange under “BABA”

Entered into a strategic alliance with Suning to build on synergies in logistics and O2O Initiatives

- Acquired a controlling stake in Lazada- Launched OS'Car, the first YunOS-enabled, mass-produced internet car

- Alibaba Cloud established four new data centers in the Middle East, Europe, Australia and Japan

Acquired Joyo.com in China

Rebranded Joyo as Joyo Amazon

Business models

Core businesses:• B2B/B2C/C2C

e-commerce marketplaces• E-marketing services• Cloud computing

services• Financing

Other businesses:• O2O services

platforms• Video and media• Social media• Travel and transport

Profit models:• Commission• Value-added

services fee• Advertising fee

Core competence:• Eco-system• Payment• Logistics infrastructure• Big data analytics• Financing

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Core businesses:• B2B/B2C/C2C

e-commerce businesses• Cloud computing

services

Other businesses:• Digital content• Smart devices• Logistics services• Retail services

Profit models:• Commission• Logistics fee• Advertising fee• Membership fee• Services fee• Retail sale

Core competence:• Eco-system• Logistics infrastructure• Big data analytics• AI analytics


Both are market leaders in their home country

Icon source: InternetSource: Internet, compiled by Fung Business Intelligence

7

49.1%

6.6%3.9%3.6%

36.8% Others

Market share of the major B2C e-commerce

players in China, 2018Q2

*Source: Analysys

Market share of the major B2C e-commerce players in the US, July 2018

*Source: eMarketer

58.2%

26.2%

5.5%

4.5%

5.6%

Others

Amazon is the global market leader in the cloud market

Icon source: InternetMarket size based on Gartner estimates; Company data based on Goldman Sachs estimatesSource: Gartner, Goldman Sachs Global Investment Research, Business Insider Nordic, compiled by Fung Business Intelligence

8

42%

14%6%

26% Others

Market share of the public cloud market,

2019e

Market share of the public cloud market, 2017e

4%

5%

4% 46%

22%

12%

3%

Oth

ers

4%

4%

9%

Financial Results

Icon source: InternetSource: Company websites, compiled by Fung Business Intelligence

2017* (US$)

+/-(%)

Net sales- North America- International- Amazon web services

177,866106,11054,29717,459

+31+33+23+43

Operating income (Loss)- North America- International- Amazon web services

4,1062,837

(1,283)3,108

-2+20-59+41

Operating expenses- Cost of sales- Fulfillment- Marketing- Technology and content

173,760111,93425,24910,06922,620

+32+27+43+39+41

* Financial year 2017: January 1 to December 31 2017

* Financial year 2017: April 1 2017 to March 31 2018

2017* (US$)

+/-(%)

Revenue- China retail- China wholesale- International retail- International wholesale- Cainiao logistics services- Cloud computing services- Digital media & entertainment

38,94428,1481,1422,2661,0561,0782,1353,119

+74+55+26+94+10N/A+101+33

Operating income 11,050 +44

Costs and expenses- Cost of revenue- Product development expenses- Sales and marketing expenses

25,04517,0653,6284,352

+86+97-46+84

Other data (China retail):- Annual active consumers - Mobile monthly active users

552 million (as of Dec 31 2017)

617 million (as of Mar 2018)

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Global expansions(Acquisition/ Investment from January 2017 to August 2018)

Amazon adopts a hybrid strategy of organic growth and acquisition; while Alibaba mainly serves as a platform and extends its ecosystem via investment

11Icon sources: InternetSource: Company websites, Internet, compiled by Fung Business Intelligence

Taobao(Domestic C2C

platform)

Tmall(Domestic B2C

platform)Aliexpress

(B2C platform -export)

Alibaba(B2B platform

across the globe)

1688(Domestic B2B

platform)

Cainiao(Logistics)

Alimama(Sales and marketing

technology)

Aliyun(Cloud computing and

data management)

Alipay(Online

payment)

Tmall Global(B2C platform -

import)Juhuasuan

(Group buying platform)

E-commerce platform~ Online marketplace ~

Supporting infrastructure~ Data, finance, logistics, corporate support services ~

Cloud computing & data

management

Amazon Web Services

Amazon

Amazon Prime

E-commerce marketplace

Online payment Amazon

Payment

Logistics/ delivery

AmazonGo

Retail

Amazon private labels

Products

Amazon Smart devices

Entertainment

Amazon Music

Amazon Game Studios

Amazon Video

Amazon Studios

Marketing

Amazon advertising

Amazon Fresh

Amazon Dash replenishmentFulfillment by

Amazon

Amazon Prime Air

Amazon Robotics

Alibaba has a diverse investment plan in China, while Amazon focuses on technological sector in its home country

12For details, please see also Appendices 1 & 2Icon source: InternetSource: Company websites, Internet, compiled by Fung Business Intelligence

* Acquisition/ Investment from Jan 2017 to Aug 2018

Media and entertainment

Wanda Film

China Media Capital

Focus Media

Ejoy Technology

Seven Ages Canxing

Damai.cn

Yiguo.com

Souche Huitongda

XiaohongshuGanjieHaoshiqi

Ycloset

E-commerce/ Social commerce

Lianhua

Sun Art Easyhome

Suning Sports

Offline retailing

XiaopengMotors

AuthineNetwork

Moredian Shiji

Baison

Plex-VR

Other technologies

Moredian

Ele.me

ofo

Tingjiandan

Meiweibuyongdeng

On-demand services

Ant Financial

ZTO Express

Babytree

Health2sync

China Unicom

Others

Dt Dream iTrigger.cnMegvii

TechnologyCloudCare

Cloud computing

Video++CambriconTechnology SenseTime

Artificial intelligence

Harvest.ai GraphiqBody Labs


RingImmedia Blink

Hardware, security technology

Clique Cheddar

Media

Wholefoods

Offline retailing

PillPack

EnergSoft

Others

Others

Global expansion: A head-to-head competition of the two giants in India is expected

13For details, please see also Appendices 3 & 4Icon source: InternetSource: Company websites, Internet, compiled by Fung Business Intelligence

E-commerce

Middle

East

UAE/Souq

Europe

Gaming

Ireland/ GameSparks

Spain/ Dribo

Learning/ driving

Canada/ Ladies Learning Code


Recruitment

E-commerce

Southeast

Asia

Singapore/ Lazada

Indonesia/ Tokopedia

Thailand/ Getlinks

E-commerce

Paytm Mall

BigBasket Paytm

Payment

xpressbees

Transport

India

Database analytics

Israel/ SQream Israel/ Lumus

Augmented reality

E-commerce

Turkey/ Trendyol

Middle

East

Augmented reality

E-commerce

Europe

Switzerland/ WayRay

Ordre

Database software

Finland/ MariaDB

Augmented reality

E-commerce

Others

The US/ Magic Leap


The US/ Umbo

Pakistan/ daraz.pk

The US/ NVXL

The US/ Deepmap

Hardware

Autonomous vehicles software

E-commerce Financial

Transport

India

Shoppers Stop

Capital Float

Acko General Insurance

ToneTag

Shuttl

Insurance

Non-profit

Appendix 1: Investment in home country


Sector Company name Year Funding

Artificial Intelligence Harvest.ai 2017 US$20M

Artificial Intelligence Graghiq 2017 Not disclosed

Artificial Intelligence Body labs 2017 Not disclosed

Hardware, security technology Immedia 2017 Not disclosed

Hardware, security technology Blink 2017 Not disclosed

Hardware, security technology Ring 2018 US$1B

Healthcare PillPack 2018 US$1B

Media Clique 2017Series B (US$8M) & Series C (US$15M)

Media Cheddar 2017, 2018Series C (US$19M) & Series D (US$22M)

Offline retailing Whole Foods Market 2017 US$13.7B

Sustainability EngerSoft, Inc. 2017 Grant (US$100K)


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Appendix 2: Investment in home country




Artificial Intelligence Video++ 2017, 2018Series B (US$22.1M),

Venture Round (RMB349M)

Artificial Intelligence Cambricon Technology 2017 Series A (US$100M)

Artificial Intelligence SenseTime 2018 Series C (US$600M)

Automotive Xiaopeng Motors 2017, 2018 Series B, Series C (RMB2.2B)

Cloud Computing Cloudcare 2017 Series B (RMB 50M)

Cloud Computing Dt Dream 2017 Series A (US$110M)

Cloud Computing iTrigger.cn 2017 Series A (US$15M)

Cloud Computing Megvii Technology 2018 Series D

E-commerce Damai.cn 2017 Not disclosed

E-commerce Yiguo.com 2017 Series D (US$300M)

E-commerce Souche 2017 Series E (US$335M)

E-commerce Ganjie 2018 Series A (US$16M)

E-commerce Huitongda 2018 Corporate Round (RMB4.5B)

E-commerce Haoshiqi 2018 Series C

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Appendix 2: Investment in home country (cont’d)




Enterprise Authine Network 2018 Series A

Enterprise Beijing Shiji Information Technology 2018 Funding Round (US$486M)

Enterprise Shanghai Baison Software Co. 2017 Funding Round

Facial Recognition Moredian 2018 Series A

Fashion Platform Ycloset 2017 Series C (US$50M)

Finance Ant Financial 2018 Corporate Round

Logistics ZTO Express 2018 Post-IPO Equity (US$1.4B)

Media and Entertainment Ejoy Technology 2017 Not disclosed

Media and Entertainment Wanda Film 2018 Venture Round (RMB7.8B)

Media and Entertainment Seven Ages 2018 Series B

Media and Entertainment Xiaohongshu 2018 Series D (US$300M)

Media and Entertainment China Media Capital 2018 Series A (RMB10B)

Media and Entertainment Focus Media 2018 Funding Round

Media and EntertainmentShanghai Canxing Cultural &

Broadcast Co.2018 Series B (RMB360M)

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Appendix 2: Investment in home country (cont’d)




Medical Health2Sync 2017 Series B (US$6M)

Offline retailing Lianhua Supermarket 2017 Post-IPO Equity (US$80M)

Offline retailing Sun Art Retail Group 2017 Post-IPO Equity

Offline retailing Beijing Easyhome Furnishing 2018 Corporate Round (RMB13B)

Offline retailing Suning Sports 2018 Series A (US$600M)

On-demand services Ele.me 2017 Funding Round (US$1B)

On-demand services Ofo 2017, 2018Series E (US$700M), Series F (US$866M)

On-demand services Tingjiandan 2018 Series C

On-demand services Meiweibuyongdeng 2018 Series D (RMB400M)

Parenting services Babytree 2018 Corporate Round (RMB1.4B)

Telecommunication China Unicom 2017 Post-IPO Equity (US$11.7B)

Virtual Reality Plex-VR 2017 Series A

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Appendix 3: Investment outside home country


Country Sector Company name Year Funding

Canada Non-Profit Ladies Learning Code 2018 Grant (US$525K)

India E-commerce Shoppers Stop 2017 Venture Round (US$28M)

India Financial Capital Float 2018 Series C (US$22M)

India Financial ToneTag 2018 Corporate Round (US$8M)

India Insurance Acko General Insurance 2018 Series A (US$12M)

India Transportation Shuttl 2018 Series B (US$11M)

Ireland Gaming GameSparks 2017 US$10M

Spain Learning/ driving Dribo 2018 Venture Round (€250K)

United Arab Emirates E-commerce Souq.com 2017 US$580M


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Appendix 4: Investment outside home country



Country Sector Company name Year Funding

Europe Luxury Wholesale Platform ORDRE 2018 Corporate Round

Finland Database Software MariaDB Corporation 2017 Series C (US$27M)

India E-commerce Paytm Mall 2017,2018 Venture Rounds (US$200M, US$445M)

India E-commerce BigBasket 2017,2018Series E (US$280M),

Post-IPO Secondary (US4300M)

India E-commerce Xpressbees 2018Corporate Round (US$100M),

Series D (Rupee2.3B)

India Mobile Payments Paytm 2017 Secondary Market (Rupee2.8M)

Indonesia E-commerce Tokopedia 2017 Series F US$1.1B

Israel Augmented Reality Lumus 2017 Series C (US$6M)

Israel Database Analytics SQream Technology 2018 Series B (US$26.4M)

Pakistan E-commerce Daraz.pk 2018 Not disclosed

Singapore E-commerce Lazada Group 2017,2018 Secondary Market (US$1B, US$2B)

Switzerland Augmented Reality WayRay 2017 Series B (US$18M)

Thailand Recruitment GetLinks 2018 Venture Round

Turkey E-commerce Trendyol Group 2018 Corporate Round

US Hardware NVXL 2017 Series A (US$20M)

US Artificial Intelligence Umbo Computer Vision 2017 Series A (US$6.8M)

US Augmented Reality (AR) Magic Leap 2017 Series D (US$502M)

US Autonomous Vehicles Software DeepMap 2018 Venture Round (US$60M)

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ContactManagement Theories and Business Models

Winnie LoSenior Research Manager Tel: (852) 2300 2488Email: [email protected]

Iris TongResearch AnalystTel: (852) 2300 4482Email: [email protected]

Fung Business Intelligence

10/F, LiFung Tower, 888 Cheung Sha Wan Road, Kowloon, Hong Kong

Tel: (852) 2300 2470 Fax: (852) 2635 1598

Email: [email protected]://www.fbicgroup.com/

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the global competition of amazon and alibaba …...the global competition of amazon and alibaba...

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