E-commerce giants Amazon and Alibaba have seen an increase in shares and value over the past year, with both now drawing the attention of investors and market experts.
During an earnings call this week, Amazon announced a 28% growth in overall sales for the company, with this increasing to 38% in overall improvement with their Whole Foods acquisition. Amazon’s presence in the retail industry has also had an impact on international sales for smaller British businesses too, setting a record £2.3bn in export sales, further increasing the pressure on rival competitor eBay. Once thought as a sleeping giant, retail company Alibaba has also increased in growth potential, particular in international sales. The most recent quarter saw their international retail growth rise to 93% year-over-year, compared with Amazon’s international sales growth of 29%.
On A Collision Course?
With these new sales and overall business growth figures coming to the surface, many are speculating that it may lead to a showdown between the two e-commerce retail giants. Currently, Amazon controls a large percentage of the market share in both the UK and the US, whilst Alibaba is known to be a dominant force in China, owning several businesses and supply chains that drive its main online web business. Possible plans by Alibaba to expand outside of the Chinese market and into further international territories might lead to head-to-head competition in a number of business sectors, analysts have predicted.
Death of the High Street?
The rise of e-commerce retail businesses like Amazon, eBay and Alibaba has brought reasonable concern to traditional brick and mortar stores over the years. Competitive pricing models and instant stock availability has often caused high street stores to re-model their business structure and more worryingly, some have been forced to shut their doors for good. But the announcement of Amazon’s success in being a source of international sales for SMEs has been seen in a more positive light by the UK International Trade Secretary, Liam Fox.
Explaining as to how Amazon’s earnings call will provide a boost to smaller UK businesses, Fox commented “The growth in SME exports on sites such as Amazon shows what can be achieved and I welcome the company’s commitments to help more companies go digital so they can grow their businesses and create jobs up and down the country.”