We pit China’s e-commerce behemoth against America’s largest e-commerce player by GMV.

Amazon has an incredibly well-diversified e-commerce marketplace. Its highly profitable AWS cloud segment remains a highly-prized profit driver.

BABA is China’s largest e-commerce player by GMV. However, Alibaba Cloud is still loss-making. Advertising is also facing headwinds from Douyin.

We discuss which of these two e-commerce bellwethers is the better buy for now.

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This article will pit two of the most prominent e-commerce behemoths in the world by gross merchandise value (GMV). Alibaba ( BABA ) represents China’s largest e-commerce platform by GMV. It also has the most mobile monthly active users (MAU). When it comes to e-commerce in China, no competitor comes close.

Amazon ( AMZN ), on the other hand, is America’s largest e-commerce platform by a wide margin. Like BABA, no other competitor in the US comes close. Both of them also have huge cloud computing businesses. Alibaba Cloud is the leader in China, but AWS is the undisputed world-leading hyperscaler. Both are also facing substantial competitive threats from their closest rivals.

When it comes to advertising, Alibaba is the clear leader. However, Amazon’s advertising revenue has been rapidly increasing. It’s the fastest-growing segment of Amazon’s business.

In this comparison, investors may be surprised that one of them emerges as the clear winner. We shall demonstrate below as China’s best takes on America’s finest e-commerce bellwether. BABA Stock Vs. AMZN Stock YTD Performance

BABA stock Vs. AMZN stock YTD performance (as of 27 Sep 21). Both stocks have significantly underperformed the SPDR S&P 500 ETF ( SPY ) this year. AMZN stock still managed to eke out a 2.61% YTD gain. BABA stock on the other hand was hit by the massive regulatory downdraft. Its YTD return of -37.6% was surely a drag for many of its investors. BABA’s GMV Won Easily

Leading online marketplaces worldwide by GMV in 2020. Data source: Digital Commerce 360 Leading online marketplaces in the US by GMV in 2020. Data source: Digital Commerce 360

Alibaba operates the business-to-consumer (B2C) Tmall platform, and consumer-to-consumer (C2C) Taobao platform. The combined GMV of both platforms amounted to a massive $1.2T. Amazon marketplace brought in $475B in GMV last year. It trails Alibaba by a wide margin, even though it’s the undisputed leader in the US. eBay was the #2 player in the US with $100B in GMV. Despite that, it couldn’t even go near the coattails of Amazon’s $475B GMV leadership.

To think that JD.com ( JD ) came in third with $405B in GMV clearly shows the vast potential of China’s massive e-commerce market opportunity. There is little doubt about that.

China’s e-commerce market value (by revenue) is expected to reach $1.54T in 2021 . On the other hand, the US’s e-commerce market is estimated to post about $599B in revenue this year. Thus, the revenue opportunity in China is almost 2.6x that of the US. Moreover, China’s e-commerce market is expected to grow by a CAGR of 6.65% by 2025. Thus, it is expected to outperform the US e-commerce market’s 4.83% CAGR by 2025.

The average revenue per user (ARPU) in China’s e-commerce market is estimated to be worth $1,562 by 2025. Even though it pales in comparison to the US’s $2,278, China still wins easily by the sheer scale of its population. By 2025, user penetration is expected to reach 1,223.9M users in China. In contrast, the US is only expected to record user penetration of 291.2M users. Therefore, there is little doubt that China’s e-commerce market offers a much larger market opportunity. But, Amazon Has Shrewdly Established Itself in International Markets

Amazon revenue segments by region. Data source: Company filings Alibaba revenue segments by region. Data source: Company filings

Amazon has already expanded rapidly into global markets to fuel its growth. Amazon’s international segment has consistently accounted for more than 30% of its marketplace revenue. In contrast, the contribution from BABA’s international segment pales in comparison to Amazon’s. Its international segment accounted for just 9.3% of its total commerce revenue (excluding Cainiao).Moreover, it has remained relatively consistent when compared to Q1’19. Therefore, Amazon has been able to penetrate international markets much better than Alibaba. While China will remain the world’s largest e-commerce market by GMV, it’s no longer expected to grow as fast. It was also one of […]

source Alibaba Vs. Amazon: Which E-Commerce Stock Is The Better Buy?

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