Amazon struggles to compete with Alibaba in China

Created by mytenbagroup May 10, 2020

Amazon struggles to compete with Alibaba in China

Amazon, headquartered in Seattle, WA, is currently valued at $910 billion, making it one of the most valuable publicly traded companies in the United States. Although it generated $252 billion in revenue in 2018 and its gross merchandise volume was $427 billion, it still lags behind Alibaba. Amazon has 330 million active users, which is half of what Alibaba has. china ecommerce market

However, the number of international Amazon Prime users has increased over time, surpassing domestic users in 2018, and is expected to continue to grow at a faster rate. But while Amazon Prime now has over 100 million subscribers, half of which are located outside of the United States, it does not seem to be doing well in China as it competes with Alibaba. This could be because Amazon finds it hard to compete with such as same-day delivery and free shipping. Amazon plans to shut down its marketplace in China in favor of refocusing to “cross-border” selling to Chinese consumers.

Looking forward: The future of commerce
Amazon seems to have already dominated the e-commerce space in the United States. However, today e-commerce accounts for only 10 percent of total US retail sales. This number is expected to rise, and some experts estimate it could reach 50 percent 10 years from now.

One major factor that causes people to purchase their goods from brick-and-mortar stores instead of online is time. Even one-day shipping speeds are sometimes not fast enough. If Amazon follows through on its goal to offer same-day drone delivery, it is clear that the number of brick-and-mortar sales in the United States will be directly affected.