Alibaba’s sales growth almost back to pre-pandemic levels | Tech News

Alibaba’s sales growth almost back to pre-pandemic levels

China’s most valuable corporation reported sales of 153.8 billion yuan ($22.2 billion) and net income of 47.6 billion yuan in the June quarter, both surpassing projections.

By:BLOOMBERG
| Updated on: Aug 20 2022, 22:29 IST
Alibaba’s online marketplaces and logistics network is bouncing back from China’s coronavirus-induced lockdowns. The e-commerce giant is benefiting from a gradual pick-up in consumer spending in China, whose economy is among the first globally to recover from the pandemic.
Alibaba’s online marketplaces and logistics network is bouncing back from China’s coronavirus-induced lockdowns. The e-commerce giant is benefiting from a gradual pick-up in consumer spending in China, whose economy is among the first globally to recover from the pandemic. (REUTERS)

Alibaba Group Holding Ltd.'s quarterly revenue grew better than the expected 34%, signaling that Chinese consumer sentiment is recovering at a rapid clip from its Covid-19 trough.

China's most valuable corporation reported sales of 153.8 billion yuan ($22.2 billion) and net income of 47.6 billion yuan in the June quarter, both surpassing projections. 

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Ant Group, Alibaba's 33%-owned financial affiliate, grew profit roughly six-fold to $1.3 billion in the March quarter, offering a glimpse into its books in the run-up to a mega initial public offering in Hong Kong and mainland China.

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Alibaba's online marketplaces and logistics network is bouncing back from China's coronavirus-induced lockdowns. The e-commerce giant is benefiting from a gradual pick-up in consumer spending in China, whose economy is among the first globally to recover from the pandemic. 

Alibaba and close rival JD.com Inc. racked up record sales during a June shopping event this year, as heavy discounting lured shoppers who had delayed purchases during the national lockdown. At the same time, it needs to fend off growing competition from the likes of JD, Tencent Holdings Ltd., and ByteDance Ltd. across businesses spanning online retail to food delivery and cloud computing.

The result validates the thesis that Alibaba will emerge from the pandemic stronger than before. Once the operational disruptions in the March quarter are overcome, the company will benefit from the accelerated shift of users and merchants to digital channels for consumption, said Vey-Sern Ling, analyst

Alibaba handled a record 698 billion yuan in sales during the “6.18” summer extravaganza, more than twice that of JD. The sales were fueled in part by 14 billion yuan subsidies issued by Alibaba together with local brands and governments. 

“The large scale coupon-ing signals the company's aggressiveness to defend its market leading positioning,” Goldman Sachs analysts led by Piyush Mubayi wrote last month. On Thursday, it said its annual active consumers in China had grown 16 million to 742 million, powering a 34% rise in its core commerce business.

That market position is being chipped away by multiple competitors. Upstart Pinduoduo has lured small-town buyers away with cheaper bargains. JD has ventured beyond its traditional strength in consumer electronics into groceries, with supermarket goods the biggest contributor to its first-half revenue among all product segments.

More broadly, social media companies like ByteDance and Tencent are increasingly reaching out to shoppers through live-streaming, after Covid-19 fueled an unprecedented boom in online entertainment. Alibaba's Taobao Live has championed the use of influencers to hawk everything from lipstick to crayfish. While rival video apps like Tencent-backed Kuaishou and ByteDance's Douyin typically direct traffic to Alibaba platforms, they are now seeking to handle the transactions by themselves.

Competition in food delivery is also intensifying. Alibaba's Ele.me app now delivers flowers, housekeepers and masseurs in addition to lunchboxes, as Tencent-backed rival Meituan Dianping diversified into beauty products and handsets.

“The biggest challenge for Baba going forward is that e-commerce is no longer a two-horse race. JD is challenging them at the top end of the market, and PDD are winning in many of the fast-growth lower tier markets which have been elusive to Baba, and is also aggressively expanding into higher tier cities and cross border,” said Mark Tanner, founder of Shanghai-based marketing and research agency China Skinny. “Social/video commerce is taking an increasing share of the pie as all forms of digital consumption morph in sales channels - which arguably presents the biggest red flag.”

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First Published Date: 20 Aug, 17:58 IST
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