04 – 08 November 2018 / Barcelona, Spain

Amazon Versus Alibaba

Hung LeHong

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 Amazon and Alibaba vs. You
Friend or Enemy?

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 Products In 2016, We Presented …
Cars
Hospitals
Factories Platforms
Cities & Plumbing
Apps &
Software
“Single
Face to
Customer” Consumer and
Employee

Source:
2 Gartner
© 2018 Gartner,(Competing in a Platform
Inc. and/or its affiliates. All rightsWorld, 2016
reserved. presentation)
Gartner is a registered trademark of Gartner, Inc. and its affiliates.
 Current Situation
Presence in many industries

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Alibaba Group Ecosystem * Not fully comprehensive

Digital Commerce (Core) Retail Travel & Ticketing

Wholesale
Retail (China) (China domestic) International/Cross-Border Food General Merch

Logistics and Fulfillment Automotive

Banma
Technologies

Digital Media and Entertainment Financial Services

Film and Video Entertainment Digital Media Payment Banking Investment

Jiebei

Technology Customer Insights and Mkt. Healthcare

Cloud Computing Devices VPA & AI IoT
Brand Databank

Blockchain
Amazon Ecosystem * Not fully comprehensive

Digital Commerce (Core) Retail Travel & Ticketing

Retail Wholesale International/Cross-Border Food General Merch

Logistics and Fulfillment Automotive

Partnerships with auto makers

Beijing Century Joyo Courier Services

Digital Media and Entertainment Financial Services

Film and Video Entertainment Digital Media Payment Banking Investment

Amazon Lending

Joint venture with Citi and Berkshire Hathaway

Amazon Credit Card
Investments in Indian Fintechs

Technology Customer Insights and Mkt. Healthcare

Cloud Computing Devices VPA & AI IoT

Amazon AI
Services
 Where Are They Going?
Infrastructure provider to the world?

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Cost of Cloud Computing

$0.023 per GB Amazon AWS, S3

$0.0058 per Hour Amazon AWS, EC2

(1 vCPU, 0.5 GiB Memory)

Source: AWS, June 2018

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Speed of Delivery

72 hours Alibaba anywhere in world

24 hours Alibaba anywhere in China
4 hours Amazon U.S. Major Cities
1 to 2 hours Amazon Prime Now within city
0.5 hours Alibaba New Retail within city
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Virtual Personal Assistant

Public “Alexa, how do I transfer my out of

Sector state license?” State of Georgia
Healthcare
“Alexa, ask Home Health to read my
vital signs.”
“Alexa, ask Home Health what are
Healthcare my medications today.” Medocity

AliGenie can “see” and identify 40,000 Public Sector

medical packages. Alibaba

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First Help Merchants and Customers, Then Expand

 At first Alibaba created Alipay to make

e-commerce work. Credit followed
 This created the basis for continued
expansion into other regions and
industries (esp. Fin Svcs)

 Amazon slower to move to payment

because it operates in mature market
 Now Amazon Lending helps merchants.
Also investment in Indian fintechs

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Data and Insights: Available to Your Enterprise?

Amazon Alibaba
 Internal Basics  Had to fill the
(clickstream, purchasing,
recommendation demographic) vacuum.
engine.  Aggressively
 Mature markets Propensity moving to collect,
already have analyze and
data and insight Credit Score monetize.
providers.  Now aiming to
 Like to use their “leap frog” industry.
own data.
Life Events
 Now monetizing
with advertising. Social Score?
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Alibaba on Going Global: Civilization Infrastructure

“Alibaba going outside China is not

about globalizing Alibaba. We are
globalizing e-commerce infrastructure.
We are trying to build the infrastructure
of online payments. We are trying to
build an infrastructure of logistics, and
we are trying to build an infrastructure
of cloud computing,” [Jack] Ma said.
Bloomberg News, Sep 2017

Source: https://www.bloomberg.com/news/articles/2017-09-14/jack-ma-says-alibaba-has-to-change-mindset-for-global-expansion
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Gaining New Capabilities and New Customer Interaction
Amazon
Amazon Marketplace
Kindle
Alexa

Retailer

New Digital Capabilities

Ford Driver

Garage Door Home

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 Let’s Analyze Their Business Models

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The Financials Tell a Story …
FY 2017 Revenue Sources
5%
2% 9%

10%

11%

7% 49%
Subscriptions
Advertising
Cloud
Logistics
4% 3P Commission
2%
1P Retail
64%

34%

2%
Amazon Alibaba (excl. Ant)
Source: Morgan Stanley, Amazon vs. Alibaba: the Next Decade of Disruption May 2017
... That Sheds Light on Growth Plans

Amazon Alibaba
Grown on its own, Grown as a platform
Historical Growth then as platform business. business for others.

Might typically be viewed Most often viewed as a

Friend/Enemy as a competitor. channel for others.

E-commerce in different
E-commerce in different
geographies and
Future Growth (comparatively) limited
geographies. Aggressive
new industry growth.
new industry attempts.

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Amazon and Making Profits (Beyond AWS)
“Amazon Has a Plan to Become Profitable. It’s Called Advertising”
— Bloomberg News, Jan 2018

Source: https://www.bloomberg.com/news/articles/2018-01-18/amazon-has-a-plan-tobecome-profitable-it-s-called-advertising
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Alibaba on Going Asset-Heavy

“I think when you are young, tiny, a light

model is good. When you are strong, big —
think about it — you need heavy things.
There is no heavy is good, or light is good —
a mix is good. To be efficient, you need to
connect light and heavy models together.
But with Alibaba’s size today, you should not
leave the heavy model to others, it’s
something you have to do because the
infrastructure you are building up, you have
to invest,” Ma said.
Bloomberg News, Sep 2017

Source: https://www.bloomberg.com/news/articles/2017-09-14/jack-ma-says-alibaba-has-to-change-mindset-for-global-expansion
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Consider How They Will Address the Tough Issues

Antitrust/Monopoly Are they getting too big?

Will they sell your life event data or only use it

Privacy
between their own BUs?

Sustainability Excessive packaging?

Safety Battle for Fresh and traceability.

Workers’ Rights Gig economy

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 What to Do About It?
1 Consider timing
2 Compete against them
3 Leverage their capabilities
4 Build a Frenemy Map

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First, Consider Timing 1

E-Commerce Penetration 2012 vs. 2017 Estimate

Disruption

2017
100%
WORST DANGER 2-3 YEARS
accelerates when … IS OVER ZONE AWAY

2012
20% penetration 20%

is achieved. 0%

Source: “Creating Digital Value at Scale: Key Insights From the 2017 Gartner Symposium/ITxpo Keynote” (G00343703)
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 Point of Point of Point of
Need Order Fulfillment

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Will You Be Able to Deliver to New Customer
Expectations?

Point of Point of Point of

Need Order Fulfillment

 Tmall Genie  Cainiao

 AliGenie  HEMA
 Alexa  Fulfillment by
 Echo 0.5 to 2 hours Amazon
 Subscribe & Save  Amazon Flex
Commerce that comes to you
 Dash

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CIOs Will Need to Build/Source 2
Competitive Capabilities
 Digital experience
 Virtual personal assistant
 Home hub
Build an ecosystem  New retail
Customer
because you will
compete against
an ecosystem Value Financial
Proposition Model
 Thin margins
 Platform economics
Capabilities  Funding that reflects
 4 hour last mile digital ambition
 Gig economy scaling
 Product and agile culture

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Leverage Their Capabilities 3

Logistics Logistics enabler

Sales Commerce channel

Media and advertising channel

Marketing

Customer data and insight

Credit/Risk scorer
Fin Svc

Payment Suggested
Opportunity
Level:
VPA/Conversational interface
Technology
High

Cloud, storage, analytics, AI Med to Low

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Develop Your Own Big Picture 4

Frenemy Map
Enemy

Frenemy

Friend

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Alibaba Group Ecosystem: Possible Frenemy Map
* Not fully comprehensive

Digital Commerce (Core) Retail Travel & Ticketing

Retail (China) Wholesale International/Cross-Border Food General Merch

Logistics and Fulfillment Automotive

Banma
Technologies
Frenemy
Scale
Digital Media and Entertainment Financial Services Enemy
Film and Video Entertainment Digital Media Payment Banking Investment Frenemy
Friend

Jiebei

Technology Customer Insights and Mkt. Healthcare

Cloud Computing Devices VPA & AI IoT
Brand Databank

Blockchain

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Amazon Ecosystem: Possible Frenemy Map
* Not fully comprehensive

Digital Commerce (Core) Retail Travel & Ticketing

Retail Wholesale International/Cross-Border Food General Merch

Logistics and Fulfillment Automotive

Partnerships with auto makers Frenemy

Beijing Century Joyo Courier Services
Scale
Digital Media and Entertainment Financial Services Enemy
Film and Video Entertainment Digital Media Payment Banking Investment Frenemy
Friend
Amazon Lending

Joint venture with Citi and Berkshire Hathaway

Amazon Credit Card
Investments in Indian Fintechs

Technology Customer Insights and Mkt. Healthcare

Cloud Computing Devices VPA & AI IoT

Amazon AI
Services

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Amazon Ecosystem: Possible Frenemy Map (b2c Brand Perspective)
* Not fully comprehensive

Digital Commerce (Core) Retail Travel & Ticketing

Retail Wholesale International/Cross-Border Food General Merch

Logistics and Fulfillment Automotive

Partnerships with auto makers Frenemy

Beijing Century Joyo Courier Services
Scale
Digital Media and Entertainment Financial Services Enemy
Film and Video Entertainment Digital Media Payment Banking Investment Frenemy
Friend
Amazon Lending

Joint venture with Citi and Berkshire Hathaway

Amazon Credit Card
Investments in Indian Fintechs

Technology Customer Insights and Mkt. Healthcare

Cloud Computing Devices VPA & AI IoT

Amazon AI
Services
Amazon and Alibaba Collectively Brought the World:
 Platform business model
 Cloud compute
First wave  p2p payment (e.g., Alipay)
 Premium bundling (e.g., Prime)

 Sub four-hour last mile supply chain

Second wave  Banking the unbanked
 Virtual personal assistant

 Full line financial services

 Continued civilization infrastructure:
Next waves? – Logistics infrastructure
– Data and “insight score” on everyone
– AI infrastructure

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Recommended Gartner Research

 TSP Disruptor Profile: Alibaba Digital Commerce

Adrian Lee (G00351700)
 Willful Disruption: Alibaba Disrupts Through Customer Experience and
Operational Excellence
Sandy Shen (G00341989)
 Willful Disruption: Amazon Disrupts Through Scale, Richness and Reach
David Smith and Daryl Plummer (G00327542)
 Supply Chain Brief: The Real Story Behind Amazon’s Plans to Launch Its
Own Shipping Service
Greg Aimi, David Gonzalez, John Johnson (G00353682)

For information, please contact your Gartner representative.

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