Ali Hits Amazon'S "Zero Profit Mode" Or Hard To Follow.

It is reported that in order to meet Alibaba's IPO, some investment institutions are likely to sell shares of the same type of American electricity supplier to avoid overexposure to single plate. Unfortunately, Amazon is exactly the same sector as Alibaba.

But for this year's Amazon, which is far weaker than the US stock market, the bigger test now lies in how to deal with investors' dissatisfaction with Bezos's "zero profit" business strategy.

　　 A person in a high position is liable to be attacked?

Amazon, which is expanding at a high speed, is still busy.

Public information shows that Amazon has entered the three major hardware areas this year with its streaming media TV set-top boxes, FirePhone smart phones and LocalRegister payment services. In addition to these, Amazon has released localization service bazaars, unlimited number of e-book subscription services, Pantry grocery distribution service (and its matching bar code scanner), and a streaming music service. In fact, Amazon is still trying to deliver UAVs, and has invested millions of dollars in homemade drama.

And behind this series of big handwriting is the zero profit policy that has always been adhered to.

According to the spread of the industry, over the years, it has been fluctuating on the margins of losses and profits, spending every penny, which has made Amazon maintain a growth rate of more than 20% per year over the past 10 years.

It has been reported that Amazon has hired some people internally, whose responsibility is to ensure that Amazon's net profit is zero.

In this regard, Analysys International analyst Wang Xiaoxing told the "First Financial Daily" reporter, because every cent spent on investment and innovation, Amazon's business in order to achieve high-speed growth very closely linked to the layout of the business. At the same time, its business connection is closely related, such as Kindle e-book copyright - entity book business - providing cloud computing services (AmazonWebServices) and other one-stop services for enterprises on the platform.

In the view of Li Chengdong, an e-commerce strategist, Kindle, as an extension of content hardware, has benefited from Amazon's content in the book category, and extends to publishing and distribution.

But it is not that simple to copy Kindle's success to other categories. According to the Taiwan science and technology news, it has only been two months since the listing. Amazon's 3D mobile FirePhone has begun to adopt a price reduction policy. The price of the FirePhone smartphone sold by the US telecom operator AT&T will be reduced to $0.99 from the original 199 US dollars.

Previously, mobile phones were considered to be the last and most important link of Amazon. According to Bezos's expectation, Prime can effectively bind consumers of Amazon devices.

"Mobile phone is not the strength of Amazon. It is far from the content and experience of Amazon." Insiders explained this way.

In fact, when Amazon is expanding to more and more vertical areas, these innovative businesses are also facing many competitors' counterattacks. Take the AWS cloud computing business with high expectations of Bezos, for example, Google and Microsoft have lowered the price of cloud computing services one after another, in order to challenge Amazon's hegemony.

　　 Zero profit mode

"Some investments will be rewarded and some will not." Bezos wrote in an open letter to shareholders at the beginning of the listing, "but in any case, we can learn valuable lessons from it."

In the long run, we should dare to make bold decisions and gain market leadership through investment. According to Amazon's business model, keeping a zero profit or even a negative profit can make itself a super giant.

However, Amazon's poor earnings test is a test of investor patience. When Amazon announced that it lost 410 million to 810 million dollars in the third quarter, its share price fell by more than 10%.

In Li Chengdong's view, although more external image is an innovation company, most of the money is spent on R & D and innovation, but it has to be said that most of Amazon's current revenue comes from retail business.

　　 Amazon According to previous earnings reports, the company's net revenue in the second quarter was US $19 billion 340 million, an increase of 23% over the same period last year of $15 billion 704 million and a net loss of 126 million US dollars, a substantial increase over the 7 million US dollar loss in the same period last year. Among them, the company's global net sales growth is only 22%, a record low in recent years.

The concern of the industry is that the electricity business is growing at a high level, providing ample impetus for investment. If this main vessel goes wrong, Amazon's business model will face challenges.

"We can not innovate for innovation, although investors want to see innovation, but more importantly, whether these innovations have brought revenue and user growth." In Li Chengdong's view, over the past year, investors in the US who are concerned about the Internet will pay more attention to the stock market, and vip.com's Chinese electricity supplier shares are among them. With the listing of Jingdong and Alibaba, these investors have more choices. In comparison with similar investment targets, the gap can be clearly seen.

Although Wang Xiaoxing, an analyst at Analysys International, is still in China in the main market of Alibaba and other listed companies, the impact on Amazon, which is mainly European and American markets, is limited.

But with the development of the internationalization of Chinese e-commerce enterprises, companies such as Alibaba, Jingdong and so on will eventually erode the market share of the US online retail giant in the US and Europe.

Facing the hesitant attitude of the capital market, Amazon's puzzle is how to continue the story of insisting on zero profit.

　　 China business awkward

In Ali and Jingdong's stronghold, Amazon China has a history of nearly 10 years, but the sense of existence today is not high.

According to the latest data of China's online retail B2C market, the Tmall market share accounted for 52.4%, Jingdong share accounted for 18.7%, suning.com accounted for 3.5%, and Amazon China accounted for 1.9%. In the second quarter of 2014, the share of China's mobile shopping market share: mobile phone Taobao + Tmall's share reached 85.1%, mobile phone Jingdong 7.1%, mobile phone vip.com 1.6%, mobile suning.com 0.7%, mobile Amazon 0.6%.

In this regard, Wang Xiaoxing told reporters that Amazon China's business development is relatively low-key, in China still to strengthen infrastructure construction, strengthen logistics and service layout for the development focus.

In fact, in view of the current market share, the development of Amazon China has been criticized by many insiders for it is hard to see the future.

But Amazon will not give up this.

"On the one hand, export business, China has gathered a large number of sellers. On the other hand, Amazon's global sourcing still has its advantages. Li Chengdong explained.

With the appearance of Ge Daoyuan, the new president of Amazon China, cross-border electricity business has become the biggest highlight of Amazon China.

In this regard, Wang Xiaoxing said, the cross-border electricity supplier market space is huge, at present, Amazon in the field of cross-border electricity supplier layout earlier, also has certain advantages, as for the promotion of business, depends on the overall growth of cross-border electricity market and Amazon China's strength in this field.

"For consumers, although there is not much advantage in future prices, Amazon China's cross-border electricity providers can enhance the shopping experience of the existing sea people, but also reduce the threshold to further attract users of the new sea." Insiders added this way.