Alibaba looks forward to 618

After growing 19% in the financial year to end-March, revenues at Alibaba have declined in recent weeks as cities across China locked down, but the tech giant is hoping to recover lost ground during the upcoming 618 shopping festival. 

Lockdown impact

Compared to the previous year, there was “a low single-digit decline in revenue growth in April” while GMV declined in the “low teens”, CEO Daniel Zhang told an earnings call, adding that “cities with new COVID cases in April represented more than half of our China retail marketplaces’ GMV”. Those cities included merchant hubs like Shanghai and Shenzhen and their hinterlands, with all that entailed for supply chains and logistics. 

During this time, user traffic and engagement on Alibaba platforms have remained resilient, he said, but patterns of consumption across categories have shifted: less demand for fashion and electronics (and more price sensitivity), increased demand for essential supplies, such as food and FMCG products (and less price sensitivity). 

Average order values in location-based commerce businesses have increased significantly as consumers in COVID-hit areas stocked up. Diversified retail formats and fulfilment networks will be needed in future. 

Key numbers  

• The China commerce segment of Alibaba’s business claimed 903 million annual active customers for the year ended March 31. Domestic commerce was up 18% year-over-year to RMB592,705 million, or US$93,497 million.
• Value-for-money platform Taobao Deals helped drive more first-time shoppers into Alibaba’s e-commerce ecosystem; there are now 300 million consumers using it. 
• Sales and marketing expenses increased from 11% of revenue in FY 2021 to 14% in FY 2022.

618

Alibaba reports “a lot of enthusiasm” and a strong trend this year compared to last in terms of merchant enrollment and product offering. Taobao is reported to be launching a metaverse shopping experience in time for the 618 festival.

Sourced from Alibaba, Pandaily [Image: 2021 618 festival from Alibaba]