Alibaba’s revenue is (primarily) only the fees and commission they charge their sellers. They did $30B of gross sales on that day but probably only collected $1-3B in reportable revenue. Amazon does the same thing for it’s third-party sellers; only the fees and commission make it to Amazon’s top line revenue number for seller sales.
That's not true. Road to profitability and market cap are what matter.
Hypothetical: One business is making $100million in revenue, is losing $20million a year but has enough market cap to grow 10-100x and is spending most of its money on R&D/marketing, while a second business makes $1million in profit on $10million in revenue, but you've maxed out your growth and there's no more market cap, I'd rather be business 1, as you're on the road to potentially make hundreds of millions in profit later on.
i.e. I'd rather be Amazon some years back when they weren't profitable than some mom and pop online business that makes enough to pay the mortgage.
Market cap is just the number of outstanding shares * price.. It says nothing about the quality of the business. Your explanation doesn’t make sense in that regard.
Even now, looking at the results, Amazon retail is not a great profitable business. It’s still low margin. No one could have predicted AWS - the true success story.
And look no further than YC backed companies. Have any of them become profitable? Even the one company that has gone public - Dropbox - isn’t looking to good these days.
Further more, even if amazon retail still isn't profitable (I haven't checked the numbers) AWS still wouldn't have spawned without it. Think of it as a pivot, even though they still kept amazon retail.
I'm not really sure what your YC comment has to do with things.
Its every startups story that they are going to lose a bunch of money and eventually somehow make enough money to justify their evaluations. Not only hasn’t it happen with any YC company, nor has it happen with most of the money losing tech darlings like Uber, Lyft, Dropbox, Mongo,ElasticCo, etc. I believe that Amazon retail is profitable or could be anytime they chose, but not enough to justify Amazons valuation in the foreseeable future. Of course AWS is a different story.
That's simply because being profitable means you don't have anything better to do with your money, which signals to investors that you don't see any more growth opportunity. Mongo/elastic could both become profitable pretty quickly if they needed to (by slowing down hiring and expansion) but they don't do that because they're trying to grow as fast as possible, and they have enough money in the bank to sustain loses. Uber/lyft I think are fucked, but that's a different story.
Think of it this way. What do rich people do with their excess money? They invest it. So if you're a company like Mongo/elastic, what do you do with your excess money? Well, invest it back into the business. Both of these companies have years of runway before they go broke or have to go profitable, so it doesn't make sense for them to try and be profitable when there is still so much of the market left in the open.
The sales "day", at least for the West, is a week (maybe two?) when everything is on sale but the transactions are held as pending until the sale day.
It is very annoying because the discounts are usually 1-2% (again as a westerner, may well be different for Asia) and it means you might have to wait a week or two for the product to ship.
I have asked stores if they can bill me full price and ship immediately and they say no.
So its really a marketing con to consolidate one or two weeks worth of sales into one day and then proclaim they had such a huge salsa day.
Imagine if Amazon billed two weeks of sales right on Black Friday. The numbers would be insane.
I assume a lot of that Alibaba volume is them collecting smaller commission amounts on a larger number of transactions? Would be interesting to know what the gross profit margin is on their revenue figure for the day.
Alibaba is an advertising platform. They're not a retailer like Amazon. The one day sales event is gross merchandise volume, not Alibaba's actual revenue. The parent comment is comparing apples and oranges.
eBay for example did $94b in gross merchandise volume in 2018, their revenue was $10.7b.
Note: Alibaba's operating margins are approx. 30%.