Analysis Of Amazon VS Ali'S Three Rounds Of War

According to the world clothing shoes and hats net, recently,

In China, more than 400 positions including Tmall store head, Internet software engineer and Alexa designer are recruited.

Such a big fight, Amazon intends to "recover" by

The market share of China's e-commerce.

In recent years, despite the establishment of "offshore outsourcing" in China, it is huge in China.

In the market, Amazon is actually a "small role" compared with Alibaba and Jingdong.

However, like the US technology giants like Facebook and Google, Amazon has never thought of abandoning the booming Chinese market, despite its strong domestic rivals.

On the other hand, in the field of cloud computing and artificial intelligence, Amazon regards it as an important layout for future development strategy.

Recode, the US technology media, predicts that Amazon will become the direction of global technology stocks and lead the next IT industry innovation cycle.

In contrast, Alibaba's layout intention is not so simple.

From the founder of different styles of personality to the seemingly identical reality of the different business models of electricity providers, and then to the cloud computing and artificial intelligence layout with profound meaning, who is the winner of Amazon's China away challenge to Ali?

Wall Street elite VS grassroots teacher

The origins of the two world giants are probably from two legendary founders.

In 1995, Jeff Bezos set up the first American Internet retail companies Amazon in a garage in the suburb of Seattle with a start-up fund of $300 thousand.

In the same year, Ma resigned and founded China's first Internet commerce website "yellow pages in China" in Hangzhou.

From Bezos's and Ma Yun's business history, it is easy to see that although the two characters are far from their academic backgrounds, their development has some similarities.

Bezos mainly started on the platform of electronic commerce. The early stage of Alibaba was mainly aimed at online pactions of enterprises. After the establishment of Taobao in 2003, Ma Yun's wealth and popularity had been improved, though he was following eBay.

After the development of the electric business enterprise, two people began to provide more levels of services, and began to go to other fields.

Interestingly, all two people sell good chicken soup.

From Ma's "today will be very cruel, tomorrow will be very cruel, the day after tomorrow will be very good, but most people will die tomorrow night", to Bezos' "goodness is more difficult than smart, choice is more important than talent", all in the lonely business on the way to encourage a large number of fellow travelers.

Global cloud business leader VS global largest business platform

From the 2016 financial statements, Alibaba and Amason's core businesses are composed of electricity providers, cloud computing, artificial intelligence, and electricity providers are the main source of revenue: 91% of total revenue of Alibaba, and 72% of total revenue of Amason.

As the largest business platform company in the world, Ali's main revenue comes from Taobao, Tmall and Juhuasuan.

In fiscal year 2016, 423 million active users were accumulated in the above platforms. The sum of GMV of Taobao and Tmall was 3 trillion, accounting for 10% of the total retail sales of the current period, accounting for 79% of the total electricity business in China.

In addition, in the Chinese retail market, although Tmall GMV is lower than Taobao, its year-on-year growth rate has been at a high level. More and more businesses join Tmall's B2C platform, and its scale continues to expand rapidly.

Cloud computing is the biggest highlight of Ali's new business.

Looking at the global market, cloud computing has become a new engine for the rapid development of the information industry, and the cloud computing market is entering a stage of rapid development in China.

In China, Ali Yun, founded in 2009, first realized the development opportunities of the cloud computing market. 5 years of intensive farming, Ali cloud has become the upstart of the cloud computing market.

According to the 2016 earnings report, Ali cloud revenue grew 137.5% to 3 billion 20 million yuan, and the quarterly earnings also increased to three digits.

On the whole, although Ali cloud revenue accounts for a small share of total revenue, it is the fastest growing business in the company's subdivision revenues.

For Amazon, AWS (Amazon Web Service, Amazon's cloud computing service provider) grew very strongly, occupying 9% of total revenue and earning 12 billion 219 million US dollars, a 55% increase compared with 7 billion 880 million US dollars in 2015.

In the fourth quarter of 2016, it has achieved steady growth for 8 consecutive quarters.

Benefiting from the global AWS development opportunity, Internet services have become the fastest growing and most powerful business of Amazon, and will continue to serve as the most important revenue growth engine for Amazon.

Gartner, an American information technology consultancy, said in July last year: "the IT industry will spend more than 1 trillion US dollars in the next five years. It will directly affect the pformation of enterprises toward the cloud computing field". Amazon, as the leader of cloud business, will fully benefit.

Amazon VS Ali's three rounds of war

In view of Amazon's ambitious Chinese market, product path business commentary will start from Amazon and Alibaba's three main businesses (electricity providers, cloud computing, artificial intelligence) and carry out PK one by one.

{page_break}

Round 1: electricity supplier

At present, Amazon's electricity business in the United States has no enemy.

When Americans spend 100 yuan on online shopping, they give 51 to Amazon.

However, its international retail business doubled its losses in the fourth quarter of 2016 compared with the same period last year.

Among them, the "culprit" is the worst performing Chinese electricity supplier.

According to the US commercial media Business Insider, China has become the largest electricity supplier market in the world.

In 2016, Chinese online shopping cost was as high as 51556 billion yuan, an increase of 25% over last year.

In the world's largest electricity supplier market, Amazon has become a 1.3% minority.

From the perspective of market share, there are two Jingdong differences between Amazon China and Alibaba, plus a vip.com.

In addition, with the popularity of China Mobile's electricity supplier, mobile terminals have gradually replaced the PC terminal to become the mainstream.

According to the China Electronic Commerce Research Center, in 2016, the total number of mobile online shopping pactions reached 44726 billion yuan, up 121.6% from the same period last year, accounting for 68% of the total paction volume.

In terms of mobile providers, the gap between Amazon China and Alibaba is even more obvious, with a total difference of 421 times.

Unfortunately, Amazon seems to have fallen into a vicious circle in China's electricity supplier market, which is "customer less - sales decline - shrinkage category / price no competition advantage - less customers", and the market share has declined year after year since 2011.

However, in the "seesaw warfare" of the electricity supplier with such a disparate gap, product Road Business Review sees two opportunities for Amazon's future development.

The first is Prime membership service.

Prime has been the trump card of Amazon.

Bezos positioned the importance of the Prime ecosystem in parallel with Amazon's hardware services and hundreds of millions of users.

In July 2016, according to CIRP estimates, the number of Prime users in the US alone has reached 63 million, an increase of 19 million over the previous year, an increase of 43% over the previous year.

The total membership has accounted for 52% of the total number of Amazon customers in the United States, and this number is still growing.

In November this year, Prime membership service landed in China, and the Amazon Prime membership service was slightly different from that in the US market. This is the first member of China and Amazon to provide cross border orders for free distribution all year round.

In the future, Prime services will continue to explore new forms, constantly mining and attracting incremental users.

At present, Amazon China spokesman said that the growth rate of Prime is far beyond its expectation: Amazon China gained 6 times the sales volume of double eleven on black Friday in 2016, which is two times that of black Friday in 2015.

The second opportunity is the local advantage of American goods.

According to AI's consulting statistics, American goods are best sellers in China's online shopping market, with a purchase rate of 53.9%.

Therefore, Amazon's backside on the advantages of the US and the abundant global resources of Amazon group will have great imagination in the future development of China's electricity supplier market.

Nevertheless, in this round of electricity supplier war, Alibaba won.

Round 2: Cloud Computing

As mentioned above, from the 2016 financial statements, Alibaba and Amazon both regard cloud computing as the focus of business development, and the two cloud computing revenues have been significantly improved.

Among them, Amazon's AWS services have been growing steadily for 8 consecutive quarters, and Alibaba's Ali cloud revenue has increased by 137.5% over the same period.

However, Amason's advantage is obvious, technical barriers prevail, and now it has become the leader of cloud computing in the world. In 2016, the revenue of cloud computing reached nearly 27 times that of Alibaba.

According to Changjiang Securities statistics, Ali has become China's largest cloud service provider. As of March 31, 2016, Ali cloud has more than 2 million 300 thousand users, of whom 50 subscribers account for 21.7%.

Compared with about 1 million 800 thousand users and 240 thousand paid users in March 31, 2015, the number of users and the proportion of paid users in 2016 increased steadily.

According to the earnings report, Ali cloud 3 billion's revenue accounted for only a small share of 101 billion 100 million yuan a year, but showed great potential for growth.

Compared with ALI Yun's deep ploughing in the Chinese market, Amazon AWS has already opened up the expansion of its infrastructure and the preemption of the global market.

In 2016, Amazon opened 11 public cloud areas in 5 countries, including the United States, South Korea, India, Canada and the United Kingdom. Currently, it operates 42 public cloud areas in 16 regions of the world, and plans to open 5 more in France and China in the next few months.

In addition, Amazon has accelerated R & D and long-term development.

In the fourth quarter of 2016, 308 important services were released, and the number of publications in 2016 reached 1017.

At the same time, AWS announced an important investment in MXNet (open source distributed deep learning framework), and the layout of research and development is expected to bring sustained growth.

This cloud computing war, Amazon won.

Round 3: AI

Just as Microsoft controls PC and Google Android controls smartphones, Amazon tries to dominate the smart home devices through Alexa in the "vocalization" of AI.

In 2016, Alexa related equipment in the holiday shopping season is a well deserved "sales crown" on Amazon.com, and sales volume is 9 times that of the last holiday shopping season.

Meanwhile, since October 2016, third party developers have released more than 4000 new Alexa applications.

Currently, tens of thousands of developers are developing new applications for Alexa, and the list of applications for Alexa will continue to grow in the future.

This will continue to promote the development of Alexa platform and become the mainstream system of smart home.

In addition, Amazon vigorously marriages the major manufacturers to accelerate the landing of products.

In 2016, many manufacturers integrated Alexa Voice Service into their own products, including Dish DVRs, Ford and Volkswagen vehicles, GE C Lamp, Service 9, tangle, and so on.

Among them, the second largest US satellite TV service provider DISH will become the first direct Alexa compatible TV service provider; the smart home equipment of the company will be connected to Alexa, and Alexa will be the control center of the family; Alexa will be integrated with the Amazon cloud service AWS and the developer community will live as soon as possible: Samsung, general electric and so on will be the partner of Alexa.

Amazon's other heavy fist in the AI field is their revolutionary offline convenience store - Amazon Go.

Amazon Go has completely abandoned the checkout process of traditional supermarkets. Customers no longer need to carry shopping basket to wait for checkout, just pick up what you want and walk out of the store.

It is reported that Amazon Go integrates a large number of sensors, which can identify people's actions, products and location of goods, so as to complete the whole process of no cash collection.

The Changjiang Securities report shows that this advanced AI system will adopt the same technology as automatic driving, including machine vision, sensor fusion and machine learning. Although it will take some time to realize the real implementation and require continuous capital investment, Amazon's electricity supplier and AWS business will have strong backing for its strong and stable revenue generating capability, which is enough to support its landing and its future growth prospects are enormous.

{page_break}

Looking back at Alibaba, as the world's largest electricity supplier platform, relying on Ali cloud and electricity providers big data, Alibaba has begun to exert strength in the field of artificial intelligence.

Technically, from speech recognition to image recognition, and then to build the AI bottom computing platform; strategically, from the electricity supplier, payment to the field of the main business areas, such as industry, pportation and so on.

However, in general, Ali's AI is still concentrated on the B side, which has a deeper integration with the electricity supplier system and the Internet of things system, and has relatively few connections with the C terminal.

Ali's idea is that many times he will not do it himself, but he will give it to his partners to do it, and Ali will do more infrastructure behind it.

Like Amazon, Ali also has two relatively mature products of artificial intelligence.

One is the predecessor of artificial intelligence ET and ET, the little AI of Ali intelligent chat software. In the aspect of intelligent speech interaction application, ET has basically realized the intelligent human-machine interaction experience of "listening, speaking, and understanding you", that is, recognizing human language and understanding the meaning of context, and then making an answer.

It is reported that at present, in addition to video image recognition, speech synthesis, interaction, computing and other capabilities, ET has also been applied to traffic forecasting, intelligent customer service, court stenograph, weather forecasting and other fields.

The other is an increasing number of "business brain" used in e-commerce services.

The customer service demand of Alibaba has been expanding with the surge of business, which leads to a high cost of human resources.

In response to this situation, Ali cloud's artificial intelligence robot ET is involved in the service, converting voice into text, and using keyword search to complete quality inspection.

Through this technology, Ali's work efficiency increased by 20 times.

In addition, as Ali intelligent service representative, Ali Xiaomi has strong voice recognition, image recognition and deep learning ability, is a benchmark service product in the field of electric business.

In the case of dealing with millions of services on Taobao, Tmall and other trading platforms every day, Ali Xiaomi is always online and year-round. The average response time is less than a second, and the intelligent resolution rate has exceeded 90%.

That is to say, under the condition of no need of human intervention, Ali Xiaomi can provide effective and counterpart service solutions to users through semantic analysis and association calculation.

Ali group CTO Zhang Jianfeng said Ali is the biggest advantage of artificial intelligence is "Online + real-time".

Over the years, the evolving "Ali business brain" supports real-time analysis of massive user behavior and 1 billion commodity knowledge maps at the second level.

In the future, as the Internet becomes an infrastructure, computing power will erupt geometrically and all offline information islands are broken, artificial intelligence will become the key technology layout of Ali in the next 30 years.

In the war of AI, Alibaba and Amazon are also hard to distinguish.

Conclusion: unparalleled commercial kingdoms under different strategic layout

In these three rounds of war, we can say that both sides have their own advantages. Ma Yun and Bezos respectively built their empire with their own strategies and tactics.

2016 is destined to be a bumper harvest year for Ali. Its total revenue has exceeded 100 billion for the first time, reaching 101 billion 143 million yuan, an increase of 32.73% over the same period last year. At the same time, net profit of 28 billion 177 million yuan was achieved, an increase of 60.33% over the same period last year.

From the perspective of net profit alone, Alibaba has always had obvious advantages, and in 2016 it has reached 4.6 times of Amazon's.

The profit margin is an important choice of enterprise strategy.

If we have gained a higher market share in a market, maintaining a lower profit margin can actually prevent competitors from entering.

Amazon does not have no profit, but it uses a lot of profits for R & D and product innovation.

From the 2016 financial report, the difference between Amazon's gross profit rate and period cost rate is very small, and some years are even lower than the period cost rate.

The higher rate of company expenses is logistics cost rate, technological R & D rate and sales cost rate, mainly because the company emphasizes user experience, emphasizes the timeliness of freight pport (logistics cost), search accuracy (R & D cost), and has invested heavily in logistics, technical personnel recruitment, communication equipment and so on.

So Amazon does not look very profitable, but the P / E ratio remains high.

Amazon does things long and even overline lines to catch big fish.

The hard work that has been invested heavily will show extreme pcendence in the future.

Therefore, the final decision on the outcome of war may not be the strength of the two sides, but also the strategic vision of both sides.

More interesting reports, please pay attention to the world clothing shoes and hats net.