SPY381.72-1.91 -0.50%
DIA318.25+3.01 0.95%
IXIC12,609.16-310.99 -2.41%

Should Amazon Try To Acquire Alibaba, Jumia Or eBay In 2021?

Every week, Benzinga conducts a survey to collect sentiment on what traders are most excited about, interested in or thinking about as they manage and build their personal portfolios.

· 02/05/2021 07:50

Every week, Benzinga conducts a survey to collect sentiment on what traders are most excited about, interested in or thinking about as they manage and build their personal portfolios.

This week we posed the following question to over 500 traders and investors as to whether Amazon.com, Inc. (NASDAQ:AMZN) should buy another e-commerce company:

Over the next year, should Amazon buy Alibaba, Jumia or eBay?

  • Alibaba Group Holding Ltd - ADR (NYSE:BABA)

  • Jumia Technologies AG - ADR (NYSE:JMIA)

  • eBay Inc (NASDAQ:EBAY)

  • Buy None

As one of the world’s highest-grossing e-commerce platforms, Amazon is more than retail services alone: streams of revenue for the tech giant also include Kindle, Audible and Music subscriptions as well as its IT service management subsidiary AWS. 

Amazon’s main revenue streams are online product and digital media sales, Amazon Web Services cloud computing, storage and database services, Prime membership fees and other subscription-based services product sales at Whole Foods and other physical store retail formats, and advertising services and co-branded credit cards.

Amazon’s market cap comes in at nearly $1.7 trillion, more than twice Alibaba ($712 billion), eBay ($40 billion) and Jumia’s ($5 billion) market caps combined.

Twenty-six percent of traders and investors believe Amazon should try to acquire Alibaba in 2021.

Alibaba operates China's most-visited online marketplaces: the consumer-to-consumer driven Taobao and business-to-consumer focused Tmall.

Many respondents stated that, although Alibaba is less than familiar in America, the Chinese e-commerce company has a global footprint and the acquisition also has the potential to provide exponential reach for Amazon sellers.

An Amazon-Alibaba M&A would undoubtedly further develop Amazon’s international footprint and enhance economies of scale.

See Also: How To Buy Alibaba Stock.

Around 20% of respondents told us Amazon would be best served completing an M&A deal with eBay by the end of 2021.

According to Benzinga readers, the eBay acquisition could be the missing piece for Amazon. An eBay-interwoven auction feature, along with Amazon's warehouse offerings, gives the e-commerce giant the potential to go full spectrum with its ability to service consumers of brand new and secondhand goods.

Twenty-six percent see Jumia as the best fit for a 2021 M&A deal. 

A number of respondents told us Jumia is the smallest market cap in an early developing market, and a low-risk aquisition for Amazon. One respondent cited e-commerce retail data by Brookings, which said that “Africa is home to roughly 1.2 billion consumers today, projected to increase to 1.7 billion by 2030. The potential for future growth in retail and consumer spending is, therefore, bright.”

Finally, 40% of respondents believe Amazon should not move forward with an M&A deal in 2021.

Many respondents noted Amazon should instead focus on execution in their current offerings, and were concerned that the FAANG company is already fast approaching if not already in monopoly territory stateside.

This survey was conducted by Benzinga in February 2021 and included the responses of a diverse population of adults 18 or older.

Opting into the survey was completely voluntary, with no incentives offered to potential respondents. The study reflects results from over 500 adults.

Photo courtesy of Jumia.