Amazon vs. Alibaba: The Race to Dominate Fast Global Shipping | WSJ

00:06:34
https://www.youtube.com/watch?v=r6jGTdQc-Ms

Summary

TLDRAlibaba is on a mission to expand its footprint in the global e-commerce market by ensuring rapid delivery of goods from China to international customers within 72 hours. Competing with Amazon, Alibaba's strategy hinges on offering faster shipping and more competitive prices. Its logistics capabilities, highlighted by an automated warehouse, enable efficient processing of orders and swift customs clearance. Unlike Amazon, which has invested in its own transportation fleet, Alibaba collaborates with various delivery partners to enhance its shipping network. AliExpress, a key component of Alibaba's strategy, connects consumers with Chinese manufacturers, often providing cheaper alternatives to Amazon. However, both giants are grappling with the ongoing issue of counterfeit products, which threatens their reputations and customer trust.

Takeaways

  • 🌍 Alibaba aims for global shipping within 72 hours.
  • 🚚 Fast shipping and lower prices attract customers.
  • 🤖 Automated warehouses enhance efficiency in logistics.
  • 🌐 Alibaba utilizes a global partner network instead of a personal fleet.
  • 💰 AliExpress often offers cheaper products due to direct factory access.
  • ⚖️ Counterfeit goods are a concern for both Alibaba and Amazon.
  • 🤖 Testing self-driving robots for last-mile deliveries.
  • 🎯 Amazon also innovating with drone delivery trials.
  • 📈 E-commerce market expected to grow by $1.4 trillion by 2025.

Timeline

  • 00:00:00 - 00:06:34

    Alibaba aims to deliver goods globally within 72 hours as it competes with Amazon for a larger share of the growing $1.4 trillion e-commerce market by 2025. Fast shipping and lower prices are critical for attracting new customers, and Alibaba's automated warehouses and logistics company Cainiao significantly enhance delivery efficiency. The company processed $75 billion during Singles' Day, outpacing major Western sales events. It leverages a vast network of tech services to streamline transaction processes, reducing customs clearance from a month to minutes. William Xiong ensures efficient routes through partnerships with over 3,000 airlines and postal services, enabling Alibaba to expand its shipping routes without a dedicated fleet.

Mind Map

Video Q&A

  • What is Alibaba's main goal in global e-commerce?

    To deliver goods from China to anywhere on the planet in 72 hours.

  • How does Alibaba's delivery network differ from Amazon's?

    Alibaba relies on a network of over 3,000 partner airlines and delivery services, while Amazon has invested heavily in building its own fleet.

  • What is AliExpress?

    AliExpress is Alibaba's platform that connects global consumers with Chinese manufacturers, generally offering lower prices than similar products on Amazon.

  • What challenges do both companies face regarding counterfeit products?

    Both companies have faced accusations of selling counterfeit goods and are working with authorities to combat this issue.

  • What innovation is Alibaba testing for last-mile delivery?

    Alibaba is testing self-driving robots to improve last-mile delivery efficiency in Chinese cities.

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  • 00:00:00
    (speaking in foreign language)
  • 00:00:04
    - [Narrator] The Chinese e-commerce giant,
  • 00:00:05
    Alibaba, has big global plans.
  • 00:00:07
    ♪ Ali, Ali ♪
  • 00:00:08
    - [Narrator] One major goal.
  • 00:00:09
    ♪ Ali, Ali, Ali ♪
  • 00:00:11
    - [Narrator] To deliver goods from China
  • 00:00:12
    to anywhere on the planet in 72 hours.
  • 00:00:16
    (speaking in foreign language)
  • 00:00:19
    - [Narrator] Amazon and Alibaba
  • 00:00:20
    are both looking to capture a larger share
  • 00:00:22
    of the global e-commerce market,
  • 00:00:23
    which is expected to grow by $1.4 trillion by 2025.
  • 00:00:28
    - It's all execution.
  • 00:00:30
    It's who's faster on the ground,
  • 00:00:32
    it's who's focused where.
  • 00:00:34
    (tag beeping)
  • 00:00:35
    - [Narrator] And fast shipping plus cheaper prices
  • 00:00:37
    is a big part of winning new customers.
  • 00:00:41
    Alibaba's fast delivery service
  • 00:00:42
    is already gaining traction in European cities
  • 00:00:44
    and working with Western delivery companies
  • 00:00:46
    as it builds a shipping network different from Amazon's.
  • 00:00:50
    Alibaba gave us a look at its largest automated warehouse
  • 00:00:53
    in China as it plans
  • 00:00:54
    to speed up deliveries around the world.
  • 00:00:57
    (packaging rumbling)
  • 00:01:00
    (speaking in foreign language)
  • 00:01:11
    - [Narrator] Ping Tu oversees daily operations
  • 00:01:14
    in this warehouse run
  • 00:01:15
    by Alibaba's logistics company Cainiao.
  • 00:01:18
    He says robots here do all the heavy work.
  • 00:01:21
    (speaking in foreign language)
  • 00:01:30
    - [Narrator] This efficiency helped Alibaba
  • 00:01:31
    process $75 billion worth of packages
  • 00:01:34
    during the company's largest sales event
  • 00:01:36
    in China last year called Singles' Day,
  • 00:01:38
    which takes place over 11 days.
  • 00:01:41
    E-commerce analysts say this was more
  • 00:01:42
    than all of e-commerce sales during Black Friday,
  • 00:01:45
    Cyber Monday and Amazon's Prime Day combined.
  • 00:01:49
    (upbeat music)
  • 00:01:50
    But Alibaba isn't just an e-commerce company.
  • 00:01:52
    It owns a vast empire of other tech businesses
  • 00:01:55
    and many of those parts help speed up the shipping process.
  • 00:01:59
    So when you buy a product from its retail website,
  • 00:02:01
    Alibaba's payment company
  • 00:02:03
    can process the transaction
  • 00:02:04
    and then the shipping is handled here.
  • 00:02:08
    This network allows Cainiao
  • 00:02:09
    to quickly gather information digitally about your package,
  • 00:02:12
    including the price, weight and destination
  • 00:02:15
    and then send it directly to Chinese customs
  • 00:02:17
    to be cleared for export.
  • 00:02:19
    Over the years, this process has gotten faster,
  • 00:02:21
    from taking one month to clear a package
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    to now only a few minutes.
  • 00:02:26
    (voices murmuring)
  • 00:02:28
    - Every year we set very aggressive
  • 00:02:31
    experience improvement targets.
  • 00:02:34
    - [Narrator] William Xiong is in charge
  • 00:02:35
    of making sure your packages take the most efficient route.
  • 00:02:39
    The company relies on a global network
  • 00:02:41
    of 3,000 partner airlines, postal services
  • 00:02:44
    and other delivery companies
  • 00:02:45
    to handle the actual transport.
  • 00:02:47
    This allows Alibaba to expand its shipping routes
  • 00:02:50
    with new partners without having
  • 00:02:51
    to build and maintain its own fleet.
  • 00:02:53
    - We are running more than 80 chartered flights every week
  • 00:02:58
    and transfer centers in key markets,
  • 00:03:00
    like Russia, France, Spain
  • 00:03:03
    to allow very effective final deliveries.
  • 00:03:06
    - [Narrator] That's a striking difference from Amazon,
  • 00:03:08
    which says it has invested billions
  • 00:03:10
    of dollars to build its own fleet
  • 00:03:11
    that includes more than 40,000 trailers
  • 00:03:13
    and 75 cargo planes.
  • 00:03:16
    (upbeat music)
  • 00:03:17
    Amazon is also making a promise for fast delivery
  • 00:03:20
    but unlike Alibaba, its speedier service
  • 00:03:22
    is only available in 21 countries
  • 00:03:24
    where products can be delivered in a few hours.
  • 00:03:26
    But customers must pay for a subscription program
  • 00:03:29
    that can be as low as about $13
  • 00:03:31
    or as much as about $130 a year.
  • 00:03:34
    Right now, Alibaba delivers to more than 190 countries
  • 00:03:38
    but only a few products arrive
  • 00:03:39
    within 72 hours with no shipping fee.
  • 00:03:42
    So as the company tries to gain traction,
  • 00:03:44
    it says it plans to expand the service
  • 00:03:46
    to a wider array of products and charge $3.
  • 00:03:50
    The company says this service
  • 00:03:52
    will entice more people to its retail website.
  • 00:03:54
    AliExpress looks very similar to Amazon
  • 00:03:57
    and users can browse more than 100 million items.
  • 00:04:01
    But there's one thing you'll notice
  • 00:04:03
    as you compare products.
  • 00:04:05
    E-commerce analysts say
  • 00:04:06
    they are generally cheaper on AliExpress
  • 00:04:08
    and that's largely because the company has direct access
  • 00:04:11
    to Chinese factories and merchants,
  • 00:04:13
    cutting out the middleman.
  • 00:04:15
    - AliExpress is connecting the world consumers
  • 00:04:17
    with Chinese manufacturers.
  • 00:04:20
    That's an advantage Amazon doesn't have.
  • 00:04:23
    - Jeffrey Towson runs a market research firm
  • 00:04:25
    that looks at tech and logistics companies.
  • 00:04:28
    - AliExpress is effectively Alibaba
  • 00:04:31
    at its most opportunistic.
  • 00:04:33
    It's trying to do something very difficult,
  • 00:04:36
    which is reach the rest of the world's consumers.
  • 00:04:39
    - [Narrator] But e-commerce analysts
  • 00:04:40
    say AliExpress' low-cost strategy
  • 00:04:43
    has a risk.
  • 00:04:44
    Counterfeit products.
  • 00:04:45
    For years, consumer watchdogs,
  • 00:04:47
    tech and luxury companies, plus the US government
  • 00:04:50
    have accused Alibaba's e-commerce website
  • 00:04:52
    of selling fake products.
  • 00:04:54
    Amazon has also faced accusations
  • 00:04:56
    from the Trump administration
  • 00:04:57
    for selling counterfeit goods
  • 00:04:58
    from Chinese third-party merchants on the site.
  • 00:05:01
    - You get defrauded when you buy a counterfeit
  • 00:05:03
    but sometimes these things can kill you.
  • 00:05:06
    - [Narrator] Alibaba says it was cooperating
  • 00:05:07
    with governments to address counterfeiting
  • 00:05:09
    and using technologies and partnership
  • 00:05:11
    with brands and other stakeholders
  • 00:05:12
    to help identify and remove counterfeit goods
  • 00:05:15
    from its platforms.
  • 00:05:17
    Amazon said it's reporting confirmed counterfeiters
  • 00:05:19
    to law enforcement.
  • 00:05:22
    To deliver any product from its website anywhere,
  • 00:05:24
    both companies will have to tackle one
  • 00:05:26
    of the most challenging issues
  • 00:05:27
    for any delivery company.
  • 00:05:29
    The last mile.
  • 00:05:31
    E-commerce analysts say this step represents
  • 00:05:33
    about 50% of the total cost of a delivery
  • 00:05:36
    because that's been hard to automate
  • 00:05:37
    and requires manpower.
  • 00:05:41
    (packaging rustling)
  • 00:05:41
    So Alibaba is testing a new system in Chinese cities.
  • 00:05:46
    (speaking in foreign language)
  • 00:05:50
    (trolley rattling)
  • 00:05:51
    - [Narrator] The company calls this a post office
  • 00:05:52
    but instead of a mail carrier,
  • 00:05:53
    they are self-driving robots.
  • 00:05:55
    Alibaba says one delivery robot
  • 00:05:57
    can carry 50 packages at once
  • 00:05:59
    and can trim cost and time.
  • 00:06:02
    (speaking in foreign language)
  • 00:06:05
    - [Narrator] Amazon said it's also committed
  • 00:06:07
    to transforming its transportation network.
  • 00:06:09
    So it's conducted trials to improve the last leg
  • 00:06:11
    of the journey, like testing drones
  • 00:06:13
    that it says could deliver packages within 30 minutes
  • 00:06:16
    of an item being ordered.
  • 00:06:17
    (dramatic music)
  • 00:06:19
    The push to gain more traction
  • 00:06:21
    in the global e-commerce market
  • 00:06:22
    could push the two tech giants
  • 00:06:23
    to improve their systems even more.
  • 00:06:26
    And that could mean that the next item you buy
  • 00:06:28
    gets to you even faster.
  • 00:06:30
    (dramatic music)
Tags
  • Alibaba
  • e-commerce
  • global shipping
  • AliExpress
  • Amazon
  • logistics
  • counterfeit goods
  • automated warehouse
  • delivery robots