Here’s How Alibaba (BABA) And Amazon (AMZN) Are Alike And Different At The Same Time

Alibaba Group Holding Ltd (NYSE:BABA)’s mobile monetization is growing and it’s taking a page off of Amazon.com, Inc. (NASDAQ:AMZN)’s playbook, Jon Fortt said in a report on CNBC.

However, Joseph Tsai, Alibaba Group Holding Ltd (NYSE:BABA) executive vice chairman, begs to disagree. His company is not like Amazon.com, Inc. (NASDAQ:AMZN), the executive said in a discussion with CNBC’s Jim Cramer.

“[…] Alibaba is kind of a lot like Amazon in a way. They’re all about the top line. They say, ‘Hey, we’re not managing to monetization. We’re giving you these numbers now but that’s not what we’re focusing on. By the way, we’re not managing to margins either. They’re good but we’re not managing to that. What we are managing to is [gross merchandize volume] growth […] and also user growth,’” Fortt said.

Fortt said earlier in his report that instead of the expected 1.5% mobile monetization, the company reported 1.8% mobile monetization.

Alibaba Group Holding Ltd (NYSE:BABA), now often compared to Amazon.com, Inc. (NASDAQ:AMZN) after its massive initial public offering in September where it raised $25 billion in capital, has just reported its July-September quarter performance. The company’s bottom line slipped 39% to $494 million, or 20 cents a share, but mainly because of what it said were one-time “share-based compensation” for employees before its listing.

Alibaba Group Holding Ltd (NYSE:BABA)’s revenue grew by 54% to $2.74 billion. Merchandize volume across all of its properties including sites like Taobao hit $90.53 billion making it the biggest electronic commerce company in the world, ahead of its American rival.

It should be noted, that Amazon.com, Inc. (NASDAQ:AMZN) has been often criticized for its focus on growth through massive spending, offsetting its huge revenue and depleting its net profit. This focus on revenue, merchandize volume and user growth is a lot like the strategy which Alibaba intends to use, as revealed by Jon Fortt.

Related: Alibaba (BABA) Passes Wal-Mart (WMT) Market Cap

Nonetheless, Alibaba Group Holding Ltd (NYSE:BABA)’s Joseph Tsai said that his company is actually different from Amazon.

“We’re not like Amazon because [we have] the fundamental difference in business model. Amazon’s margin is hampered by the fact that they take on inventory and they have a large cost of goods sold item so their gross margin starts with a very, very low number somewhere in the low teens,” Tsai said.

He said that Alibaba operates in a marketplace model that inherently has high margins. He expressed confidence that their model does not tend to see margins go down over time. He also said that the company will be very disciplined in spending.

Amazon.com, Inc. (NASDAQ:AMZN) shareholders includes Ken Fisher’s Fisher Asset Management which reported about 2.47 million shares in the company by the end of the second quarter.