Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) is intensifying Amazon.com Inc (NASDAQ: AMZN) rivalry by promising fast deliveries from China to anywhere in the world, the Wall Street Journal reports.
What Happened: Alibaba aims to deliver goods from China globally in 72 hours. Lower price and faster delivery play a crucial role in winning market share. Alibaba’s e-commerce products are cheaper than Amazon due to its direct access to Chinese factories and merchants.
Both giants are trying to win the global e-commerce market, which is estimated to reach $1.4 trillion by 2025, WSJ noted.
Alibaba’s fast delivery is gaining prominence in European cities. It is working with Western delivery companies towards a different shipping network compared to Amazon.
Alibaba has 800 robots in its largest China warehouse. It is 2x as efficient compared to a conventional warehouse. Robots do the heavy work, which speeds up their activities. It helps process $75 billion worth of packages for the 11-day Chinese Singles Day sales.
Alibaba’s other tech businesses help to speed up the shipping process. When a consumer purchases from the retail site, the payment company can process the transaction, followed by the shipping handling. The network helps the company obtain information regarding the order quickly. The data goes to the customs for export clearance.
Why It Matters: Alibaba depends on multiple shipping partners to save the maintenance of its fleet, unlike Amazon. Amazon’s speedier service is only available in 21 countries, and it also entails an annual subscription plan. The plan ranges from $13 in India to $130 in the U.K.
Alibaba delivers products in 190 countries, and only a few products are available in the 72-hour time frame without any shipping fee. To expand the service over a more comprehensive array of products, it needs to charge $3 as a subscription fee.
However, Alibaba runs the risk of counterfeit products. The Donald Trump government had also accused Amazon of selling fake products through third-party Chinese merchants. Alibaba is working with the government and stakeholders to counter fake product sales.
Alibaba is trialing with robotic delivery for the last leg of the journey to cut costs and time. Amazon is also experimenting with drone delivery.
Price action: BABA shares traded lower by 3.82% at $200.06, and AMZN shares traded higher by 0.13% at $3,701.57 on the last check Thursday.
See more from Benzinga
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.