Alibaba Group Holding reported its slowest quarterly sales growth since its 2014 public listing, amid regulatory scrutiny, the tough macro-economic environment and stifling competition. Total sales revenue of the e-commerce firm rose by just 10% to CNY243 billion in the quarter ended December, as slower growth was registered in its core e-commerce business. “Alibaba delivered steady progress this quarter as we continued to execute our multi-engine growth strategy in a complex and volatile market environment,” CEO and Chairman Daniel Zhang said in a statement. “We achieved positive momentum in key strategic businesses through a disciplined focus on capacity building and value creation to fuel our future growth.”
Danny Law, Analyst at Guotai Junan Securities, said ahead of the release of the results the numbers are “the consequence of slowing revenue growth and accelerating spending.” Competition built up as e-commerce rival Pinduoduo marched ahead by effectively mobilizing people’s social network contacts, and upstarts like short video app Douyin gained popularity by helping influencers peddle merchandise through short videos and live-streaming sessions.
“E-commerce-derived growth of other platforms is outpacing that of Alibaba, meaning they are eating into the market share of Alibaba,” said Lu Zhenwang, CEO of Shanghai Wanqing Consultancy. “Douyin and Kuaishou are no doubt the shepherds of live-streaming-based commerce.” Consultancy QuestMobile said users spent an average 1,871 minutes on Douyin in October, versus only 350 minutes on Alibaba’s Taobao. Macro-economic conditions and sporadic instances of Covid-19 cases also weighed on consumer spending into the end of last year, which dented growth of e-commerce companies. In a major adjustment from previous practice, Alibaba started in the December quarter to separate its China and international retail businesses into different reporting categories. It has also broken out figures for its logistics arm Cainiao, and its local consumer service. Its China commerce business, which is the single largest portion of the company’s revenue, came in at CNY100.09 billion, representing a 1% year-on-year fall.
On the bright side, its cloud segment jumped 20% year-on-year, and international commerce was up 18% during the December quarter. Revenue from Cainiao grew 23% year-on-year to CNY19.6 billion, driven by both the growth of fulfillment solutions and value-added services provided to China commerce retail businesses and increases in cross-border and international commerce retail businesses, the China Daily reports.
