Alibaba and Amazon are set to fight it out for global e-commerce dominance. Both are building out distribution networks all over the world. It might not be winner take all, but there are huge returns to scale so there may be only a few winners that dominate in the future.
Alibaba has some big advantages: lower cost structure (PRC salaries) and better direct contacts with the factories in China that produce the goods.
In fact, a major trend underway is disintermediation between manufacturers and consumers. See, e.g., Shein, with 100M+ downloads (fast fashion).
All of these companies form the C2M (consumer to manufacturer) layer that provides the following functions.
1. Fulfillment and inventory management
2. Product and price discovery
3. Product evaluation, trust and consumer confidence
Item #1 has both physical and information infrastructure components, and is the most expensive to build. Items #2 and #3 can be built entirely virtually with much lower barrier to entry.
Just for fun I checked on AliExpress and I could find many of the same products as on Amazon, but at much lower prices. Not surprising, as it's all made in China these days.
At the moment Amazon delivery to US customers is much faster, but the situation varies by country and is changing rapidly.
No comments:
Post a Comment