E-commerce is a big industry with the likes of Alibaba, Amazon, and so on. Amazon is the most popular in the U.S., whereas Alibaba is more popular worldwide. Whenever there is a headline in the e-commerce industry, Alibaba will usually pop up first. This is not surprising since, in the worldwide e-commerce industry, Alibaba has the largest percentage worth based on the 2018 GMV measurement.
Amazon’s worth is 10 percent, less than that of Tmall and Taobao, which are 13 percent and 16 percent, respectively. Then, considering that Alibaba group is the parent company for Tmall and Taobao, it has more worth than Amazon.
However, there are many other subsidiary companies under the Alibaba Group. The Alibaba Group also owns Alibaba.com, the largest marketplace for B2B. You should know many things about the Alibaba Group, and that is the purpose of this guide.
Things You Need to Know About the Company
These include:
- It is huge in China
- It is different from Amazon
- Its structure raises questions.
- The lack of presence in the S&P 500
- Its founder has a fascinating story.
It is huge in China.
Alibaba Group’s largest profit is made in China through retail sales, particularly at the sites of its two principal subsidiaries, Tmall and Taobao. Due to the country’s high population, many people prefer shopping online to physical stores.
Alibaba made it easy for the Chinese to purchase different kinds of goods online by making the littlest goods available regardless of the price. In a year, about 11.3 billion purchases are made through Alibaba sites which about 231 million people actively use.
In China, ranking the sites people visit most during research, Taobao came third, and worldwide, the position was 12th. Also, Tmall, the second major subsidiary of Alibaba, ranked 37th worldwide and the 11th most-visited site in China.
Different from Amazon
Although they are both giants in the e-commerce industry, Amazon and Alibaba have their differences. Unlike Amazon, Alibaba only serves as an intermediary between the buyers and the sellers, bringing businesses, including smaller ones, to the notice of the buyers.
Amazon has big warehouses to provide what the buyer needs, but Alibaba does not operate in such a way. Besides big retailers, Alibaba gets commissions from searching for placements and selling ads.
Its structure raises questions.
Owning Chinese-based companies by foreigners is prohibited in China, thus, making the opportunity of foreign ownership impossible. However, the company is listed in the United States market under the Cayman Islands. The Cayman Islands Company is also known as Alibaba Group Holding Limited.
It implies that any foreigner that wants to invest in the company will own part of the Cayman Islands Company instead of Alibaba. Nevertheless, due to the way the company is structured, it is possible to be illegal based on the law in China.
Lack of Presence in the S&P 500
In the United States, only companies that are domiciled are included in the S&P 500, but the structure Alibaba possesses makes it impossible for the company to be in the S&P 500. Therefore, most indexes will not recognize it, thus making it a risky investment. The lack of proper indexes to analyze the company’s stock value makes it less patronized by institutional shareholders.
Its founder has a fascinating story.
Although Alibaba is popular within the e-commerce industry, its founder, Jack Ma, has an interesting story. In 1995, when on a visit to the United States, he was opportuned to use the internet for the first time. Although he was a poor school teacher, that moment marked Alibaba’s beginning.
Upon returning to China, leveraging the use of the internet by listing companies based in China that are in search of business internationally. After experiencing failure, he stopped and emerged after four years with Alibaba in 1999. Only eighteen workers worked and operated from Jack Ma’s apartment when he created the company.
Now, the company has developed such that it has become a giant in the e-commerce industry, making Jack Ma among the richest men in the world.
Conclusion
Since the company’s establishment, Alibaba has enjoyed increased revenue because it is now the largest company in the e-commerce industry. Like other companies, you can also buy shares of Alibaba. However, knowing the best time to purchase the stock is important; thus, investors are urged to study the Alibaba stock forecast.