Alibaba vs Amazon: Comparing Two Ecommerce Giants

Alibaba and Amazon are two titans in the ecommerce industry that have transformed how we shop and do business. While both platforms represent a high percentage of global online retail, the way they operate as a business varies in multiple ways. 

In this article, we’ll run through the different aspects of both platforms, from their business models, how they generate income, and how Amazon and Alibaba each made their way to the top of the ecommerce industry.

History of Alibaba and Amazon

Alibaba

The history of Alibaba traces back to 1999 when it was created by Jack Ma. It started as an online B2B marketplace to connect Chinese manufacturers to global buyers. 

Since then, the company expanded to consumer-focused platforms like Taobao and Tmall, helping it become the leading ecommerce platform in China. Alibaba’s growth continued when they introduced services like Alipay for digital payments and expanded into cloud computing and entertainment. 

The innovations made Alibaba a diverse platform influencing the digital world in China and other countries apart from being an ecommerce marketplace. However, it wasn’t until 2014 that the company became known globally. When Alibaba made it on the New York Stock Exchange, it set a record-breaking initial public offering (IPO) of $25 billion.

Here’s a look at the full timeline of Alibaba below:

Alibaba's timeline up to 2023
Alibaba continues to diversify its business as more than an ecommerce company.

Amazon

Amazon was founded five years earlier than Alibaba by Jeff Bezos

Operating originally as an online bookstore called “Cadabra” (but was later changed after his lawyer Todd Tarbert said it sounded like “cadaver” on the phone), Amazon’s early success helped the company expand rapidly into all sorts of different categories, including a private label brand, to help it transform into the vast online marketplace we see today. 

As for its logo, it’s actually a smiling arrow that starts at the letter A and ends at the letter Z.  

This signifies the company's commitment to offering a comprehensive range of goods from A to Z and the arrow's upward trajectory represents progress, growth, and customer satisfaction. The smile is meant to depict a positive and friendly experience for their customers.

Amazon timeline until 2021
Amazon has continued to be one of the leading ecommerce in the globe

Alibaba vs. Amazon: Ecommerce Business Model

At first glance, it may seem like Alibaba and Amazon operate at a similar pace. Both exclusively operate online, make income from commission fees on products, subscriptions to different services, and paid ads. 

However, their respective business model as an ecommerce company has distinct features. For starters, Alibaba focuses on B2B transactions while Amazon focuses more on B2C transactions. 

What does this mean? For Alibaba, it acts as a middleman between buyers and sellers. This is where you’ll mostly find suppliers and manufacturers who can help you launch a private label brand or dropshipping business. 

Alibaba uses several subsidiaries such as AliExpress, Taobao, and Tmall to sell products, unlike Amazon where it's one big marketplace.

Alibaba ecommerce subsidiaryYear establishedProducts you'll mostly findCountries it caters toFulfillment servicesHow the platform makes money
AliExpress2010Products from manufacturersGlobal market3PLCommission fees (around 5% to 8%) 
Taobao2003Products from manufacturersChina3PLAdvertising to increase product  visibility
Tmall2008Branded productsGlobal market3PLAnnual fees and commission fees (around 0% to 10%)
Lazada Group2012Mix of generic and branded productsSoutheast Asia3PL or Fulfilled by Lazada (FBL)Commission fees (not more than 5%) 
Trendyol2010Mix of generic and branded products, and delivery servicesTurkey and EuropeTrendyol ExpressCommission fees (around 5% to 22%) 
Daraz2015Mostly generic productsSoutheast AsiaFulfillment by Daraz (FBD) 1.75% payment fee, commission fee (around 3% to 16%)
Idle Fish2014Used productsChina3PLAdvertising to increase product  visibility
Alibaba Health2015Pharmaceutical productsChina 3PLHealth products and services

Amazon focuses more on customer convenience, quick delivery, and a wide selection of products, often leveraging data analytics to personalize recommendations and improve the customer experience. While you will occasionally stumble upon a supplier when scrolling through Amazon, it’s not as common compared to scrolling on Alibaba.

Amazon’s main revenue stream is still its ecommerce marketplace, which made up more than 42% of its income in 2022.

To make revenue outside the ways we mentioned earlier, Amazon also has Amazon Basics and fulfillment services (FBA and MCF) to allow customers to purchase generic products at a lower price and receive them as soon as possible.

Alibaba vs. Amazon: Cloud Computing Services

Alibaba provides a wide range of cloud computing services through Alibaba Cloud, including data storage, power computation, and AI solutions. This segment of Alibaba generates revenue through subscription plans and pay-as-you-go usage fees catered for businesses and developers.

On the other hand, Amazon has Amazon Web Service (AWS), a cloud computing platform that offers scalable and cost-effective cloud computing solutions. 

AWS is a widely used cloud platform that provides several on-demand activities such as database storage, host and secure work applications, and content distribution.

Of the two platforms, Amazon has the edge in terms of cloud computing services. AWS has a wider reach than Alibaba Cloud and costs less with the more services you use. However, if you’re a small business, Alibaba Cloud is the better choice since you only pay for what you need. 

Alibaba vs. Amazon: Membership Services

Alibaba vs Amazon membership deals
Amazon offers Prime membership options to help its customers save and be more enticed to shop.

To enhance loyalty from customers and encourage frequent purchases, Amazon offers an Amazon Prime membership for a monthly fee (currently $14.99 a month or $139 a year). With this membership, customers are provided with fast and free shipping, access to streaming services (i.e. Amazon Prime Video, Music, etc.), exclusive deals, and unlimited photo storage.

Not to be outdone, Alibaba introduced a premium membership program in 2018 called 88VIP. Members get to enjoy same-day delivery (limited to China), an extra 5% off on products, and coupons for several premium products and services, including Youku (similar to Prime Video), Ele.me (similar to Uber Eats), Fliggy (travel services), and Gaode Taxi (similar to Uber). 

Alibaba shoppers can avail of this membership by paying an annual fee of $140. However, if you have more than 1,000 membership points, your annual fee drops to only $13. In both cases, Alibaba does not offer monthly membership options. 

Who Generates More Revenue? Amazon or Alibaba?

Between the two e-commerce giants, Amazon generates more annual net sales

The graphs found that the highest annual revenue of Alibaba (measured only since 2013), was approximately 868.89 billion Yuan, or $126.49 billion, a number eclipsed by Amazon in 2016. Meanwhile, Amazon’s annual net sales revenue peaked at $513.98 billion in 2022. 

The good news for both brands is that revenue has continued to grow each year. 

Alibaba vs Amazon: Fulfillment Services

This is another aspect where Amazon has a clear edge. 

Through the FBA program, Amazon takes all the headaches away from sellers by handling shipping, inventory, and even product returns in exchange for a monthly fee. 

With more than 100 fulfillment centers in the United States and over 180 centers spread across the globe, Amazon has continued to find the best way to pick, pack, and ship orders as efficiently as possible by leveraging the use of both humans and advanced robotics. Aside from fulfillment centers, Amazon also has multiple sortation centers that store inventory.

Aerial view of one of Amazon's warehouses
Amazon has multiple fulfillment centers in the world to help deliver packages as soon as possible.

Amazon’s edge mostly lies in its global reach and trust gained from its customers. Outside of China, some people are still skeptical of shopping or sourcing their products from China. Alibaba has introduced somewhat of a similar program to Amazon FBA called Alibaba.com Fulfillment Services (AFS).  

It allows you to tap into Alibaba’s trusted network of suppliers immediately and have them handle the negotiation and quality checks as they make their way to you. Overall, this program lets you save on shipping costs since most of the orders are consolidated instead of having them shipped separately. 

Alibaba doesn’t charge a monthly fee. Instead, you’re free to choose from verified suppliers and the costs will vary depending on the weight, shipping method, and agreed price with the supplier.  

Selling on Each Platform

Market Focus

One big difference between each of the two online marketplaces lies in their target market. Amazon directly caters to consumers, offering both new and used items, whereas Alibaba serves as a middleman connecting buyers and sellers.

However, this doesn’t imply that Alibaba isn’t trying to compete with Amazon. As we mentioned earlier, the company has other seller platforms in AliExpress and Taobao.

When it comes to geographic reach, Amazon has a wider global reach with localized websites for various countries and dominance in the Western markets. Meanwhile, Alibaba primarily focuses on the Chinese market and has a strong presence across Asia.

Fees

This is another significant aspect where you can see notable differences between the two platforms. With both websites, there are some fees and commissions you need to consider.

Seller fees on Amazon

If you want to start selling on Amazon, they offer two seller plans that you can choose from:

Seller monthly plans on Amazon
Amazon charges a small commission fee for every item sold on its website.
Individual – $0.99/item sold

This plan is ideal for entrepreneurs who sell less than 40 items per month. It may also be best to choose this plan if you don’t have plans to advertise or use some of Amazon’s advanced selling tools and programs.

Professional – $39.99/month

This plan works well for businesses that sell more than 40 items a month and want to qualify for top placement on the product’s detail page.

For each seller plan, you have the option to pay per sale or stick with a flat monthly rate. Of course, in either plan, you have the option to change or cancel anytime. On top of these fees, take note there are other additional fees you have to pay for selling an item, including: 

  • Closing fees – averaging $1.80
  • Referral fees – 8% to 45%
  • Shipping fees – $3.99 to $46.50 per order
  • Storage fees – $0.69 to $3.40 per cubic foot per month

Recommended reading: Selling on Amazon in Europe: Everything You Need to Know 

Seller fees on Alibaba

Alibaba, on the other hand, maintains a relatively loose approach to charging fees, which is evident by its fee-free Taobao platform. 

Nonetheless, it’s important to note that selling on the platform isn’t entirely ‘free’. Alibaba gains revenue from sellers who pay to bump their products up the rankings. 

Similar to Amazon, Alibaba also offers two types of seller plans that both come with different features that include product posting, receiving and responding to queries, and data reporting.

Alibaba monthly seller plans
Alibaba's monthly seller plans includes different services and training to help sellers succeed on its platform
  • Basic Plan – $199/month

This plan includes unlimited product listings, 10 product showcases, a customized storefront, 20 responses to RFQ’s (Response to Quotation) per month, and more.

  • Premium Plan – $299/month

This plan includes everything in the Basic Plan, plus an additional number of product showcases, responses to RFQ’s, with also full access to Alibaba.com’s Keyword Trends, Smart Marketing automation, and more.

FeesAmazonAlibaba
Monthly seller fee$39.99/ month or $.99 per item sold$166/ month (if billed annually), $199/ month (if billed quarterly
Refund administration feeLesser of $5.00 or 20% of referral fee.0%
Referral feeAround 8% to 45% of item cost0% 
Listing feeFree for first 100,000 listings (monthly fee of $0.005 per eligible listing that hasn’t sold in 12 monthsFree for first 50 listings (must avail of one of their selling plans afterward) 

Pros and Cons of Each Platform

As two of the top ecommerce marketplaces in the world, both still have their fair share of pros and cons.

Pros of selling on Amazon

  • Global customer base
  • Convenient for small businesses
  • Amazon FBA program
  • Amazon FBA program
  • Multiple payment gateways for products

Cons of selling on Amazon

  • Highly competitive marketplace
  • High commission fees per each item sold
  • Additional fees to sell on its website.

Pros of selling on Alibaba

  • High user traffic with over 20 million active users
  • Listing more products will help gain more exposure
  • Cheaper alternative to source products

Cons of selling on Alibaba

  • Highly competitive marketplace
  • Language barriers and cultural differences
  • Mostly uses 3PL to fulfill orders
  • Longer shipping time
  • Mostly uses 3PL to fulfill orders

Final Thoughts

Overall, Alibaba and Amazon have become the global giants in the world of ecommerce by continually finding new ways for both its sellers and customers to have a positive experience. 

While both platforms do come with their pros and cons, ultimately it comes down to what your needs are as a business. The competition to get your products noticed is easier on Alibaba than on Amazon, but you do have to factor in shipping costs and the language barrier of selling to a more international market. 

Have you tried selling on Alibaba and Amazon? Which platform did you find more success? Let us know in the comments below!

Derick Quinanola

With a passion for helping businesses navigate the world of ecommerce and online marketing, Derick has been working as a writer and digital marketer for more than 3 years, helping companies of different niches grow their online presence. In his spare time, Derick loves to exercise, play video games, and spend time with his family.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button