Alibaba Reports Biggest Growth Since IPO
Chinese e-commerce giant Alibaba Group Holding Ltd. recently reported that its revenue from April – June increased 59% over the same period last year, marking the fastest growth rate for the company since its record-breaking IPO back in 2014.
While those numbers are attractive enough for retailers, what might be even more interesting is why Alibaba officials feel they’re seeing such tremendous successes.
“The acceleration of our revenue growth reflects the deep value propositions that we bring to our customers,” said CEO Daniel Zhang. “We are changing the way our 434 million active buyers engage with our platform, as we introduce social, community and personalization driven by smart data into our e-commerce marketplaces, realizing our vision of ‘Live@Alibaba’.”
Of course, Alibaba’s main businesses remain operating China’s most dominant online marketplaces:
- Taobao (where around 7 million merchants and individual sell)
- Tmall (the marketplace for brands and retailer)
Alibaba has demonstrated a keen ability to tap into growing trends of its users. Take, for example, the fact that 75% of China marketplaces revenue came from mobile-device purchases. Knowing this, Alibaba created a rather intuitive mobile app that is designed to increase engagement with shoppers (such as video streaming).
During June, 2016, folks opened the Taobao app an average seven times a day and users posted more than 20 million reviews and comments a day.
That type of engagement is extremely impressive, and signifies just how in tune Alibaba is with its consumers.
Overseas brands enter China with Tmall.com, with more than 8,700 new branded stores opened on Tmall during last quarter, including Sunglass Hut and Hasbro.
All of this is to say that US retailers should be keeping their eye out on Alibaba, although the latest election could change things a bit.
According to Bloomberg, Donald Trump’s trade policies, if implemented, are likely to pose the biggest threat to e-commerce operator Alibaba
“Given the direct and indirect risks, the election probably has the greatest impact on Alibaba more than any Chinese internet business,” said Gil Luria, an analyst at Wedbush Securities Inc. “If there are disruptions in trade, it would impact the willingness and likelihood of U.S. brands and retailers to take an active part on Tmall.”
So What Can US Retailers Do Now?
Putting politics aside for the moment, keep in mind that Alibaba has designed a platform aimed to make it simpler for US companies to sell their products to China’s consumers.
Alipay ePass is designed to eliminate barriers to market that come from not having a physical presence in China (such as shipping difficulties and converting dollars to yuan).
Traditionally, US-based companies have to jump through hoops to sell a product to China. They have to have a presence to attract consumers, and then accept payment and convert currency. Then they need to ship the product to China, clear customers and incur charges along the way.
Alipay eliminates all that. But it’s not right for everyone.
How can you determine what role Alibaba should have in your retail strategy? OperationROI can help. Our team specializes in analyzing international market trends and helping our clients pursue channels that provide the highest return on investment.
Learn more by calling us at 1-888-277-5429 or by filling out our contact form.
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