POSTED BY Nicole Cocozza

“Most companies, when they’re doing good, they enjoy today’s wonderful life. They don’t worry about five years from later – but I worry about five years later.” ~Jack Ma

The preceding quote is the philosophy behind the creator of the new global e-commerce company, Alibaba.  Over the past month, this global e-commerce company has had an unprecedented debut in the United States by raising a record breaking $21.8 billion in an initial public offering (IPO).  The company is valued at a total of $231.4 billion, making it larger than Amazon.com and EBay Inc. combined.  So, exactly what does this mean for other global e-commerce sites in the world today?

Currently, Alibaba is the hot spot for online shopping.  It is considered the world’s fastest growing e-commerce market with over hundreds of millions of users while it hosts millions of merchants and businesses.  What can Alibaba do for you? It can be used as a marketplace, a search engine and a bank.  It consists of three sites, Taobao, Tmall and Alibaba.com. Taobao is the largest shopping site with over seven million merchants.  It sells almost anything and everything.  The site benefits both users and sellers; customers can access the site for free, while sellers can pay for ads to make products known to the consumers.  Alibaba has a reputation for putting customers first.  It is an e-commerce company known for its open-marketplace connecting buyers and sellers.   It is a site that allows for small businesses to grow and it allows popular, branded manufacturers to reach to consumers.  The reason for Alibaba’s success is its strategy to not sell anything directly or own any warehouses.

Nonetheless, it is evident that Alibaba is having great success, but what does this mean for recognized e-commerce sites like Amazon.Com. Like Alibaba, Amazon.com allows customers to buy products at low prices. However, one huge difference is Amazon.com acts as its own marketplace, similar to a retail store.  It distributes its own products directly and even creates its smartphones and tablets (i.e. Kindle). Amazon.com is also known for having good customer relationships.  However, such positive characteristics will not help it become globally known in places like China.  Right now Amazon.com is well known in the United States e-commerce market, but Alibaba’s recent IPO on Wall Street is introducing a new competitor for United States’ consumers in the e-commerce setting.

How can e-commerce sites gain global reputation? If both companies want to be known globally, they must first create a strong home market.  This allows for each company to gain trust in a competitor’s market.  Further, it is important for each company to invest.  Like Mr. Ma said “[He] worries about five years from now.”  These words are manifested in Alibaba’s recent $50 million dollar investment in a TV Remote App Peel.  This app acts as a TV remote control, allowing smartphone users to control their TVs with their phone. Even though this investment does not involve e-commerce, it will allow for its name to become known on a larger scale.

It is obvious that Alibaba is taking the lead for e-commerce companies like Amazon.com.  However, it is going to be hard for Alibaba to compete with Amazon.com in the United States since it has established itself as a reliable, user-friendly customer e-commerce site.  If Amazon.com wants to compete with Alibaba, it needs to start establishing a marketplace abroad for the future of its reputation in the global e-commerce market.  Alibaba is making promising steps to becoming the future competitor for Amazon.com.  Therefore, if Amazon.com wants to compete at a global scale with Alibaba it better start thinking about five years from now.