Alibaba is more than ‘a Chinese Amazon’

Queena Kim Mar 17, 2014
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Alibaba is more than ‘a Chinese Amazon’

Queena Kim Mar 17, 2014
HTML EMBED:
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Alibaba gets compared to Amazon because it dominates China’s e-commerce market. But that’s where the comparison ends, says Perry Wong, a researcher at the Milken Institute. He said unlike Amazon, Alibaba doesn’t sell goods directly.

“It’s transaction platform rather than a merchandise selling outfit,” he said. 

In other words, Alibaba is a middleman.

He tells this story about using Alibaba while at a hotel in Beijing: I ordered something and I got the delivery in 3 ½ hours,” Wong says. “The person who delivered it was a young man who rode on a bicycle.”

Wong says people use Alibaba to buy everything from a few packages of ramen for dinner to big ticket items like computers. And the company does big business. In one day, Alibaba can sell more goods than all the e-commerce business in the U.S. put together, Wong says. 

Is Alibaba the ‘Chinese Amazon?’

But Alibaba’s reach doesn’t stop with e-commerce, says Duncan Clark, with the investment advisory firm BDA China. The company’s into almost every consumer service in China. 

“[There] were at one point, hospital appointment booking services,” Clark says. “Another example would be a service called Kuaidi Dache, which is like Uber to book a taxi and this is hugely popular now.”

Alibaba also bought a big stake in China’s Yelp. The companyt’s into restaurant bookings, travel and even consumer banking. It makes microloans to small businesses and has a virtual wallet program that has about $80 billion in holdings.

Paul Sweeney, an analyst at Bloomberg Industries, says investors are bullish because Alibaba is more than an e-commerce play. 

“When investors buy Alibaba, they’re not just buying the growth of Chinese e-commerce,” Sweeney says. “But they’re also buying the growth of consumerism in China.”

Sweeney says Alibaba does faces stiff competition from other local firms in China, but big U.S. players like Google and Facebook are nowhere. 

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