A focus on low-cost goods in response to cautious consumer spending helped boost domestic e-commerce sales
14 May 2024 - 17:35
byAkash Sriram and Casey Hall
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Trader works at the post where Alibaba is traded on the floor of the New York Stock Exchange in New York, the US, March 28 2023. Picture: REUTERS/BRENDAN MCDERMID
Bengaluru/Shanghai — China’s Alibaba Group Holding beat analysts’ estimates for fourth-quarter revenue on Tuesday, as a focus on low-cost goods in response to cautious consumer spending helped boost domestic e-commerce sales.
Its US-listed shares, however, fell about 3% in premarket trading, as profit fell about 86% in the fourth quarter.
The company has had a tumultuous year since announcing the biggest shake-up in its 25-year history in March 2023, splitting into six units and refocusing on its core businesses, including domestic e-commerce.
Consumers in China have been spending carefully after the Covid-19 pandemic amid an economic slowdown and property slump.
Alibaba’s domestic commerce arm, Taobao and Tmall Group, grew 4% year on year with order volume increasing double-digits.
Analysts expected strong growth from Alibaba’s international digital commerce arm, given its investments in building global market share and appetite among global consumers for low-cost goods from China.
The segment delivered with 45% growth, compared with an expected 39% revenue rise, according to LSEG data. Losses nearly doubled to ¥4.1bn ($5667 million) from ¥2.2bn a year ago as it invested heavily to remain price competitive and shorten delivery times.
The group’s other “core” business, its cloud division, said in April it would cut prices by as much as 59% for products that are powered by its offshore data centres, amid rising competition to attract artificial intelligence software developers. According to the earnings report, AI-related revenue from external customers, a relatively new business, grew at triple digits year on year.
The group overall reported revenue of ¥221.87bn in the three months ended March 31, compared with a consensus estimate of ¥219.66bn, according to LSEG data.
Net income in the March-quarter was ¥3.27bn, compared with ¥23.52bn a year ago.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Alibaba revenue beats estimates as profit plunges
A focus on low-cost goods in response to cautious consumer spending helped boost domestic e-commerce sales
Bengaluru/Shanghai — China’s Alibaba Group Holding beat analysts’ estimates for fourth-quarter revenue on Tuesday, as a focus on low-cost goods in response to cautious consumer spending helped boost domestic e-commerce sales.
Its US-listed shares, however, fell about 3% in premarket trading, as profit fell about 86% in the fourth quarter.
The company has had a tumultuous year since announcing the biggest shake-up in its 25-year history in March 2023, splitting into six units and refocusing on its core businesses, including domestic e-commerce.
Consumers in China have been spending carefully after the Covid-19 pandemic amid an economic slowdown and property slump.
Alibaba’s domestic commerce arm, Taobao and Tmall Group, grew 4% year on year with order volume increasing double-digits.
Analysts expected strong growth from Alibaba’s international digital commerce arm, given its investments in building global market share and appetite among global consumers for low-cost goods from China.
The segment delivered with 45% growth, compared with an expected 39% revenue rise, according to LSEG data. Losses nearly doubled to ¥4.1bn ($5667 million) from ¥2.2bn a year ago as it invested heavily to remain price competitive and shorten delivery times.
The group’s other “core” business, its cloud division, said in April it would cut prices by as much as 59% for products that are powered by its offshore data centres, amid rising competition to attract artificial intelligence software developers. According to the earnings report, AI-related revenue from external customers, a relatively new business, grew at triple digits year on year.
The group overall reported revenue of ¥221.87bn in the three months ended March 31, compared with a consensus estimate of ¥219.66bn, according to LSEG data.
Net income in the March-quarter was ¥3.27bn, compared with ¥23.52bn a year ago.
Reuters
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