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Differentiated business model enables Alibaba (NYSE:BABA) to become significantly more profitable than Amazon

Alibaba Group Holding Ltd (NYSE:BABA) stock is up 0.77% in today’s pre-markets trading at USD 102.23. The stock is trading 11% higher than its 50 day moving average of USD 91.94. The price to earnings ratio is at 35.98 and price to balance ratio at 7.55.

Alibaba is the Chinese e-commerce empire.  It is the dominant e-commerce player is China and has a massive consumer base, over 400 million active users in 2015 (defined as someone who purchased something in 2015).

Together with Amazon and eBay, they are the global leaders in the e-commerce sector. Just like Amazon and eBay, Alibaba focuses on helping people buy a vast variety of products at low prices without stepping into a store. However, unlike Amazon, Alibaba operates an open market place that connects buyers and sellers. Alibaba does not have its own sales, warehouses nor logistics in the same sense as Amazon – it is just a middleman. Its business model resembles more of eBay’s business model. Alibaba also has an advertising business model, where for example sellers can pay to get ranked higher in its internal search engine.

In addition Alibaba has a sizable interest in number of large digital companies, including Weibo and Youku Tudou, which is often referred to as “China’s YouTube”.

Due to Alibaba’s very different business model compared to Amazon’s, Alibaba’s revenues are lower, however Alibaba is significantly more profitable than Amazon.

Alibaba is part of Flioz China ShoppingBoom portfolio. Get your own copy of China Shopping Boom portfolio from Apple AppStore. Download Flioz investment strategy app for iOS.

This Alibaba information is courtesy of a premium China stock portfolios – created by WealthyTec – and offered through the Flioz mobile app for iOS.

About Jukka Blomberg

Founder & CEO of WealthyTec, Inc and author of How to Profit from China: https://www.amazon.com/gp/product/952936783X/

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