Alibaba’s marketplace sales in China grow 28% in Q2 to $112 billion
28.10.2015 375 views
China’s economic slowdown is not noticeably slowing its dominant e-commerce company, Alibaba Group Holding Ltd.
Alibaba reported Tuesday that consumers purchased 713 billion yuan ($112 billion) on its Chinese online marketplaces in its fiscal second quarter, which ended Sept. 30, an increase of 28% over the same period last year. Were it not for Alibaba discontinuing its lottery ticket sales in February the year-over-year increase in gross merchandise value would have been 30%, Alibaba says.
The company also reported revenue increased 32% to 22.171 billion yuan (US$3.49 billion) and net income of 22.70 billion ($3.57 billion), including a $2.93 billion gain from an upward revaluation of the Alibaba Health business. Without that adjustment, net income would have been $645 million for the quarter.
To put Alibaba’s numbers into context, Amazon.com Inc., No. 1 in the Internet Retailer 2015 Top 500 Guide, reported for its quarter ended Sept. 30 that it sold $18.46 billion of products on its own behalf, an increase of 15.2%. Given that outside merchants selling on Amazon sites account for 46% of units sold, and that their goods tend to be priced higher than the average Amazon SKU, which includes many books and videos, Internet Retailer estimates the gross merchandise value sold on Amazon sites in its third quarter was about $40 billion. That’s about 36% of the GMV of Alibaba’s China marketplaces.
Sales on Alibaba’s three big consumer-oriented shopping sites in China account for about 80% of China’s online retail sales. Those sites are Taobao, an open marketplace that features goods from more than 8 million sellers; the Tmall marketplace aimed at big brands, and on which such companies as Apple, Nike and Burberry sell; and the Juhuasuan flash-sale site.
Transactions from mobile devices accounted for 62% of purchases on Alibaba’s China marketplaces. Revenue from mobile transactions increased 183% to 10.52 billion yuan ($1.655 billion) in this quarter.
“This was a great quarter for Alibaba Group, with strong growth across the board and in particular outperformance in mobile,” Alibaba CEO Daniel Zhang said in a statement accompanying the earnings report. “We remain focused on our top strategic priorities, including internationalization, expanding our ecosystem from cities to villages, and building a world-class cloud computing business.”
Alibaba says its China marketplace growth was primarily driven by an increase in the number of active buyers. Alibaba added 19 million active users in the quarter, and the number of consumers who have made purchases in the past year increased to 386 million from 367 million a year ago.
For the 2015 fiscal year ended March 31, Alibaba reported gross merchandise sales increased 46% compared to the year-ago period.
“The GMV [gross merchandise volume] grew slower, but it is still a pretty good quarter for Alibaba,” Guo Hui, a senior analyst at investment firm TD Ameritrade, tells Internet Retailer. “Chinese consumers’ shopping habits have not changed, and they have lots of money in their saving accounts. That may keep consumers confident to shop even though the economy has showed some weak signals in the short term.”
Another fast-growing business is cloud services. Alibaba reported its cloud computing business increased 128% to 649 million yuan (US$102 million). Alibaba has opened data centers in Singapore and U.S this year.
For its international expansion, Alibaba says it is focused on cross-border commerce, especially international brands and retailers that want to sell their products to China. Alibaba recently opened offices in London and Milan to serve more European brands.
AliExpress, Alibaba’s global retail site that lets Chinese companies sell to consumers worldwide, grew at a more modest pace than the China business. Alibaba reported second quarter revenue from its international commerce retail business, which is mainly AliExpress, of 481 million yuan (US$76 million), an increase of 15% compared with 419 million yuan in the same quarter of 2014.
“It is clear that within China, Alibaba is managing to accelerate performance thanks to both improved retail propositions and the surge in mobile shopping,” Neil Saunders, CEO of investment advisory firm Conlumino said Tuesday in a note on Alibaba’s results. “Alibaba’s role as a facilitator for Western brands wanting to sell into China continues to be the company’s main commercial advantage. Its ability to work closely with those merchants to improve performance will benefit the revenue streams of both parties, as well as creating a more attractive and compelling offer for consumers.”
The increase in Chinese consumer spending, especially online shopping, still outperforms China’s GDP growth, which is 6.9% in the third quarter. China’s Ministry of Commerce has reported that China’s retail sales grew more than 10% in the first nine months, while online retail grew 34.7% in the same period.
Source: Internet Retailer
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