Alibaba revenue soars
Alibaba’s total revenue rose 31.7 per cent in the last quarter, most of the increase due to a 35 per cent lift in Chinese retail sales.
International performance was somewhat less robust with a more muted 15 per cent rise in retail sales.
Neil Saunders, CEO of Conlumino, says with the retail eCommerce business on a shallower trajectory compared with the heady growth rates of the past (which reached as high as 60 per cent on occasion), it is clear that within China, Alibaba is managing to accelerate performance thanks to both improved retail propositions and the surge in mobile shopping.
Two particular statistics stand out from the company’s mobile sales data, he says.
“The first of these is that Alibaba’s mobile retail sales grew by 183 per cent this quarter; the second is that mobile now accounts for the majority, some 61 per cent, of Alibaba’s total retail sales in China.
“Of course, much of this is down to the continued growth of smartphone and tablet use in the country, but Alibaba deserves credit for taking a lead in terms of shifting its proposition and platforms firmly away from PC to mobile based selling. The recent heavy promotion of the Taobao mobile app to both consumers and merchants was one of the factors that helped to underpin strong mobile performance this past quarter – including a surge in shopper numbers from lower tier cities and more rural areas, where the use of mobile devices for shopping is particularly prevalent.”
Saunders says Alibaba’s focus on attracting Western brands to its various Chinese platforms continues to deliver fruit.
“Changes to marketing systems, which made them more effective, resulted in a higher spend by merchants which, in turn, attracted more Chinese consumers to the sites and helped to edge up conversion rates.
“In our view, Alibaba’s role as a facilitator for Western brands wanting to sell into China continues to be the 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.”
Outside China, Alibaba’s international division performed reasonably, but was “far from spectacular,” says Saunders.
“At retail level, sales were up by a fairly modest 14.8 per cent, a sequential deterioration on the 40 per cent increase it managed to post last quarter. In our view this underlines the fact that, despite its scale and its technical expertise, Alibaba continues to struggle in carving out a niche in crowded and competitive Western markets.
“As such, its focus on less developed retail locations like Brazil and Russia, together with the more collaborative approach which involves partnering or taking a stake in local eCommerce operators is a sensible, and profitable, way forward on the international front,” he concluded.