Both Alibaba and Amazon are the leading companies in the e-commerce world, and I believe that both of them are two of the most disruptive innovators in the business world. When comparing and contrasting these two e-commerce giants, I recalled the concept of point of parity and point of difference.
PoP:
Both Alibaba and Amazon are e-commerce corporations who “focus on helping people buy a vast variety of products at low prices without stepping into a store, and who are “dominant players” in their home markets. They “disrupted” and reformed the traditional way of selling and purchasing good to totally online operation; meanwhile they offer their customers with such low prices(cost leadership strategy) for almost every commodity.
PoD:
As operating an “open marketplace”, Alibaba is serving as the “e-middle man” who connects buyers with sellers, who are not just small business but also branded manufacturers online. As a result, Alibaba does not sell to its customer directly and doesn’t not need any warehouses, which heavily reduces its fixed costs for having neither inventory nor renting a warehouse.
As operating an “managed marketplace”, Amazon distributes its own products; manufactures its own brands of electronic devices, having a strong supply chain and a strong control over its customers experiences. I believe that Amazon is an example of the vertical integration business model.
Finally, I believe that the differences between the different cultures and political situations in China and United States, Alibaba and Amazon’s home markets, are the key factors that caused these two e-commerce disruptive innovators to have differentiated approaches and policies on operating and promoting the companies. In order for Alibaba and Amazon to continue expanding themselves in their home markets and even gain popularity in each other’s home markets, they would need to have more understanding about the different cultures, regulations and different needs of the target audience in different markets. Additionally, they need to become even more disruptively innovative in order to stay in the super competitive e-commerce market and to win the “battle” in the coming years.
There is always a need for more disruptive innovation in the market!
Web References:
http://en.wikipedia.org/wiki/Amazon.com
http://en.wikipedia.org/wiki/Alibaba_Group
http://www.reuters.com/article/2014/09/22/us-alibaba-ipo-value-idUSKCN0HH0A620140922
http://www.segmentationstudyguide.com/understanding-perceptual-maps/points-of-difference-pod/
http://en.wikipedia.org/wiki/Points-of-parity/points-of-difference
http://www.claytonchristensen.com/key-concepts/
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