Over the last two decades, e-commerce giant Amazon (NASDAQ: AMZN) has recorded significant growth solidifying its position in the United States and globally courtesy of several innovative strategies. However, changing consumer behavior has resulted in an influx of other e-commerce platforms that are attempting to eat into Amazon’s market share.
In this line, data presented by Finbold indicates that Amazon has so far recorded a 28.12% growth rate in online traffic across the U.S. in 2022. Notably, the growth rate trails Alibaba (NYSE: BABA) by at least four times less, with the China-based online retail giant standing at 98.45%. Among the selected e-commerce platforms, Alibaba’s growth rate ranks third overall, while Amazon occupies the eighth slot.
Elsewhere, Shein has the highest growth rate at 183.45%, followed by Instacart at 174.99%. Kroger (NYSE: KR) ranks in the fourth spot at 81.92%, with Nike (NYSE: NKE) closest to the top five category at 54.16%. Other notable retailers include Etsy (NASDAQ: ETSY), Aliexpress, and Walmart (NYSE: WMT), with a growth rate of 26.16%, 13.51%, and 11.65%, respectively.
Why Amazon and Alibaba differ in growth rate
It is worth noting that despite the slowed growth rate, Amazon still ranks as the leading e-commerce platform in the U.S., solidifying its position in recent years. However, based on Amazon’s existing growth rate position, it should not be interpreted as the Chinese giant is eating into its U.S. market share. Amazon still has the upper hand regarding growth, profitability, and valuation.
The varied growth rate between Amazon and Alibaba partly mirrors the different business models used by the two companies. Notably, Amazon sells goods directly to consumers, with Alibaba mainly acting as a marketplace for independent buyers and sellers. In a nutshell, Alibaba’s business model is to move products, while Amazon earns more from sales.
In the general e-commerce landscape, both Amazon and Alibaba have been considered competitors on a global scale. However, in the U.S., the two companies have a symbiotic relationship where Alibaba is a significant source of bulk goods that drop shippers sell on Amazon.
Consequently, Alibaba’s U.S. e-commerce merchants have mainly focused on niche products like agriculture, food, health and beauty, and electronic and medical supplies. At the same time, Alibaba has increasingly implemented new directives seeking to entice American entrepreneurs to buy and sell goods on its platform.
Overall, Alibaba’s U.S. venture is part of the company’s broader B2B expansion that targeted smaller players. The platform’s goal was to add 1 million local businesses.
Amazon’s stalling online business
Furthermore, Amazon’s low growth rate follows the stalling in the company revenues over the last few months. The online business has reversed, although consumer demand has not been affected. However, Alibaba has been achieving consistent growth in revenue as compared to Amazon.
Indeed, Amazon’s drop follows the significant growth that was inspired by the pandemic leading to the implementation of several measures to meet the growing demand alongside navigating a global disruption in the supply chain that impacted the company’s costs and performance.
The firm embarked on a hiring spree and logistics build-out, but now it is facing another challenge with soaring inflation which will likely affect consumer spending.
The future of Amazon and Alibaba
Overall, Alibaba’s growth rate in the U.S. is a positive sign for the company considering its parent firm faces challenges back home in China. In recent years, the government has moved to clip the influence of private sector tech companies, with Alibaba emerging as a casualty.
In comparison, Amazon does not face any significant political risks. However, the company has increasingly been hit with several anti-trust regulations, but they have not resulted in any significant jitters among investors.
On the flip side, Alibaba’s position in the United States is also threatened, courtesy of the prevailing hostility between the countries of the two parent companies.
The significance of the situation was recently highlighted after U.S. authorities added e-commerce sites operated by Alibaba Group to the “notorious markets” list. The lists also entailed sites operated by Tencent Holdings, with the companies accused of engaging in or facilitating substantial trademark counterfeiting or copyright piracy.