Alibaba, Dangdang or Jingdong?

Background: Founded in 1999, Alibaba starting from cross-boarder B2B business. In 2003, it introduced C2C store Taobao and Alipay, a online payment tool like Paypal. In 2005, it merged with Yahoo China and entered online searching business. In 2008, it introduced Taobao Mall, a B2C online shop. One year later, Alibaba Cloud Computing Company was established. In 2011, Taobao.com was separated into three different companies, Taobao C2C, Taobao Mall and Etao. In the past 11 years, Alibaba Group has been in the e-commerce field and managed to construct a full e-commerce industry chain, which covers B2B, B2C, C2C, payment processing, cloud computing, group-purchasing and even finance.

In comparison, Amazon is an IT company in other words client-oriented. Its did not limited its business within the e-commerce field. So it enter any markets as long as there is a user demand.

Similarities between Alibaba Group and Amazon are: Both have introduced B2C open platforms and third-party ISV platforms, and offered services in cloud computing, payment tools and group purchasing.

Their differences are: 1) Amazon sells products made by itself. However Alibaba only run the platform and does not sell products of its own. 2) Amazon has a super logistics system and IT cloud computing capability, whereas Alibaba is after all planning on its logistics system and its cloud computing service is very limited. 3) Amazon has made impressive achievement in services like electronic reader, music shop and stream media, yet Alibaba is nevertheless focusing on e-commerce.

But investors as well need to be aware that Jingdong Mall is much less in business scale than Amazon and is currently faced with severe challenges. It is nevertheless unclear whether it will follow Amazon’s track.

2) Jingdong Mall’s logistics system needs upgrades. Even though an initial nationwide layout is completed, the company’s warehousing and logistics are relatively poor, and are in all seriousness impeding stable development of business and improvement consumers’ experience. Jingdong Mall needs large amount of cash and time to build an adequate logistics system.

3) Jingdong Mall’s business layout is uncertain. It is questionable that Jingdong Mall, like Amazon, will uninterruptedly expand its business and introduce electronic reader, digital shop, stream media and other services. It was reported that Jingdong Mall has plans to develop its own product. Nevertheless it will not be hardware, yet crops like rice.

Background: Established in 1997, Dangdang aimed to become "the largest online Chinese book store in the world."After, it dived into the field of online books and competed with Joyo Amazon, a Chinese subsidiarily of Amazon. In 2005, it started to expand into other products categories. In 2006, the expansion sped up afterwards the company completed financing from venture capitals. Nevertheless it was not until 2008 that Dangdang expand to household items. In 2009, Dangdang initiated a plan on B2C platform to attract third-party businesses to sell products. In 2010, the company went public, afterwards which it tried to increase sales volume by expanding its product lines into apparels and fashions.

Book, for Amazon, is just a basic product. Starting with books, Amazon quickly started a series of expansio. However selling books online is the main business of Dangdang. By the second quarter of 2011, publications for all that accounted for 75.8% of Dangdang’s total revenue.To improve user experience, Amazon invested a huge amount of money building logistics and IT systems. Dangdang currently leases warehouses in 6 cities.

Based on books and other publications, Amazon introduced mobile terminal Kindle, in an attempt to deliver digital contents to the hands of consumers as fast as possible. It, meanwhile, established an independent ecosystem around Kindle: a content platform, a publishing platform, an advertising platform and a product platform. However up till now, Dangdang has achieved nothing in the business of digital publications.

In sum, Dangdang has advantages in selling books online in China. Facing with fierce competition, Dangdang began to expand into other product categories to increase revenue. However the company does not have any advantage in logistics system and other services. As for the cloud computing, application platform, mobile terminal and other services that has brough major revenue for Amazon, Dangdang not even has a plan.