China’s e-commerce giant Alibaba is growing fast. The company announced on Thursday (August 23, 2018) that its revenue reached 80.9 billion yuan ($11.8 billion), growth of almost 61% in the fiscal first quarter of 2017. The majority of that growth came from the company’s online shopping sites, but was also due to the expansion of Alibaba’s cloud computing business, which had revenues of almost 5 billion yuan in the first quarter.
With such tremendous growth, you might think that Alibaba was creeping up on Amazon, its US counterpart, in terms of revenues. In actuality, though Alibaba’s market capitalization is almost half of Amazon’s, it remains far behind. Alibaba’s year on year revenues were only about 21% of Amazon’s. Alibaba and Amazon’s models aren’t identical, so this isn’t a perfect comparison. While Amazon sells goods directly to consumers, Alibaba acts as a marketplace for independent buyers and sellers, like Ebay. Recently, Alibaba has made more profit as a share of its costs than Amazon, likely in part because of this slimmer model.
Still, Alibaba is making some progress in matching Amazon’s revenues—it was only at 17% of Amazon’s one year ago—but it has a long way to go. If Alibaba and Amazon’s revenues keep growing at their current paces over the last two years, it would not be until after 2040 that Alibaba would catch up.