Alibaba ups yearly guidance after solid quarter

Internet Retailing

25th Jan 2017

Alibaba has upped its guidance from 48 per cent to 53 per cent year-on-year growth in FY2017 on the back of strong quarterly earnings.

The Chinese e-commerce giant reported RMB 53.248 billion (AU$10.2 billion) in revenue, a 54 per cent year-on-year increase, in the quarter ending December 31, 2016.

The biggest revenue gains were in cloud computing and digital media and entertainment, which both saw triple-digit growth last quarter.

Revenue from Alibaba’s core commerce business, including its Taobao and Tmall e-commerce platforms, increased 45 per cent year-on-year, aided by the acquisition of South East Asian e-commerce platform Lazada in April.

The Lazada deal drove up revenue from the company’s international division by 288 per cent year-on-year during the quarter, backing up its  global expansion strategy to connect Western brands and retailers with online shoppers in the emerging markets.

Alibaba’s global shopping festival on 11 November, often called Singles’ Day, also contributed to growth in the quarter, with RMB 120.7 billion (AU$23.3 billion) of merchandise sold in 24 hours.

“In our view, the event is a testament not only to Alibaba’s reach within China and, increasingly, the wider world – but also to its ability to create engaging experiences which excite and stimulate consumers,” Håkon Helgesen, retail analyst at Conlumino, said.

“In essence, the day was as much a social event – with online and virtual reality games – as it was an opportunity to sell product.”

This is backed up by the addition of 43 million mobile monthly active users (MAU) to the Alibaba’s China retail marketplaces during the quarter, bringing total mobile MAUs to 493 million, or roughly one third of the population of China.

“The growth in mobile MAUs in this quarter was primarily due to the continuing success of our efforts to provide highly relevant and engaging content to increase user engagement on our mobile platforms,” Alibaba stated.

Helgesen predicts the company will continue to develop the social shopping experience in 2017 and beyond, using its extensive consumer data to create more immersive retail experiences.

That retail experience will increasingly involve bricks and mortar stores: This quarter saw Alibaba take an equity stake in the Chinese grocery chain Sanjiang Shopping Club and offer to acquire a controlling stake in department store and mall operator Intime Retail Group.

“Ultimately, we see these steps as giving Alibaba a much wider reach into China’s gigantic, and still rapidly growing, retail market. Longer term, it should address any concerns about Alibaba running out of steam in its home market,” Helgesen said.

“In summary, we retain our opinion that Alibaba is a solid, and highly disruptive, retailer.”