- Alibaba and Amazon are critical players in the e-commerce marketplace while Amazon is a retailer of new and used goods. Alibaba, on the other hand, plays the role of “middleman” by connecting buyers and sellers.
- Strength, Quantitative and Qualitative Accounting Metrics, Non-accounting factors, and Corporate Governance (CG):
- Superior Firm: Amazon has maintained its superiority in the e-commerce business for decades but is currently facing stiff competition from competitors like Alibaba, which has shown the potential to overtake the giant retailer.
- Quantitative and qualitative accounting metrics: In general, Amazon has better parameters than Alibaba with financial reports that contain details such as about profit margins, share value, and debt ratio. It also shows the unquantifiable information (management expertise, the strength of Research And Development (R&D), labor relations, and industry cycles(Amazon, 2019). Lacks sufficient information relating to its accounting assessments
- Non-accounting factors: Show Amazon as having more online influence and better customer service –outperforms Alibaba.
- Corporate Governance (CG): Alibaba’s CG includes executive chairman and Vice Chairperson, Chief Executive Officer, and Board of Directors. The senior managers include the CFO, CTO, CRO and a president of wholesale marketplaces Amazon, on the other hand, has a corporate government consisting of Board of Directors, managers, and an audit committee.
- Both receive a high valuation from financial analysts.
- Alibaba: 47 brokers covering it, and none of them has a sell rating.
- Amazon: 44 analysts covering the company of which the only one has given the company a sell rating.
- Ratings and projected mean targets
- Amazon has a projected mean target at $197.51, which is almost 15 percent higher than where the company’s shares stand today. The firm’s sales rating is 17 percent, which is an increase compared to its mean target price of $1,150.46. Moreover, for Amazon, the approximated annual rate of growth in revenue is 25.9 percent for the last three years. These prospects motivate Amazon and give the hope of higher future achievements.
- Alibaba has equally shown remarkable progress. Recent data from financial analysts demonstrates that the company’s performance is better compared to Amazon’s. For example, in 2018, Alibaba recorded sales of more than $240 billion on its platform, and its stock increased more than Amazon. It’s market cap was within striking distance to surpass Amazon. The firm notably performed better than eBay and Amazon combined(Bloomberg, 2019).
III. Growth Prospects:
- Both firms have favorable potential growth prospects
- Amazon has a 28% annual growth rate in net income and a 3% net margin. The firm retained significant earnings over the years with an expanded business scope. Approximate stock increase is $300 (2015) to $1,640 (2019). Thus, Based on these prospects, the company hopes to be worth $6000 per share in 10 years(Amazon, 2019).
- Alibaba’s annual revenue growth reaches $11.8 billion in 2019. The value is approximately 61% increase compared to 2018. Moreover, in 2018, Alibaba announced that its revenue reached $11.8 billion, an increase of close to 61% from their previous results (Bloomberg, 2019)
In sum, Amazon is generally performing better than Alibaba. Although the latter has shown significant progress over the last two years, it is still outperformed by Amazon, which continues to outstand despite stiff competition from companies like Google. Evident, the competitive advantage that Amazon enjoys comes from the fact that the company is an excellent customer service online in the simple purchasing process. Its services also shine due to its ability to deliver purchases to customers.
CB Information Services, Inc. (2018). Infographic: Amazon’s Biggest Acquisitions. CB Insights. Retrieved from https://www.cbinsights.com/research/amazon-biggest-acquisitions-infographic/
Amazon. (2019). Investor Relations. Amazon. Retrieved from https://ir.aboutamazon.com/corporate-governance
Amazon Filters. (2019). Corporate Social Responsibility. Amazon. Retrieved from https://www.amazonfilters.com/company-information/compliance-information/corporate-social-responsibility/
Bloomberg. (2019). Alibaba. Bloomberg. Retrieved from https://www.bloomberg.com/search?query=Alibaba