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Alibaba posts steady revenue growth despite regulatory pressures

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By Shawn Lim | Reporter, Asia Pacific

August 5, 2021 | 5 min read

Ecommerce giant Alibaba has announced lower profit growth in its earnings and steady revenue growth.

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In June 2021, Alibaba’s China retail marketplaces had 939 million mobile monthly active users

It posted an increase in revenue of US$31.8 billion in its fiscal first quarter ended June 30 and said its net income in the April-June quarter was US$6.9bn, down 5% on-year. This was lower than analysts' consensus estimates, which was for 36% growth to USD$32.3bn.

This comes as China launches a six-month-long campaign to clean up big tech in the country, including fining Alibaba in April for monopolistic practices.

“In the past few months, Chinese regulators have issued rectification requirements against the community marketplace players selling below cost, which hurts the market integrity, and community livelihoods,” said Daniel Zhang Yong, executive chairman and chief executive of Alibaba.

“We believe in the growth of the Chinese economy and long-term value creation of Alibaba, but we have to pay full attention to the regulatory requirements and will continue to operate with discipline.”

What are the highlights of the earnings?

  • In June 2021, Alibaba’s China retail marketplaces had 939 million mobile monthly active users, representing a quarterly net increase of 14m. Alibaba plans to continue to increase penetration in less-developed areas.

  • Alibaba’s China retail marketplaces recorded solid physical goods GMV growth that reflected strengths in categories such as apparel and accessories, home furnishing and consumer electronics.

  • A part of its new retail strategy, Alibaba’s community marketplaces business continues to exhibit rapid growth, with GMV and gross floor area of its regional distribution centres (RDC) growing around 200% and 260% quarter over quarter, respectively.

  • Sun Art, the hypermarket which Alibaba acquired in October 2020, achieved approximately 28% year-over-year growth in online orders, with the shared inventory initiative with Tmall supermarket being the biggest growth contributor.

  • Sun Art is the top supplier of Alibaba’s community marketplaces business. As of June 30, 2021, Sun Art has stores in 235 cities across 29 provinces in China.

  • For its food delivery business Ele.me, Alibaba saw a strong order growth of over 50% year-over-year during the quarter ended June 30, 2021. To meet increasing demand from new users, Alibaba took measures to ensure improvements in its quality merchant base, as evidenced by a year-over-year increase in the portion of GMV contributed by national and regional chains.

  • Alibaba’s Lazada, which focuses on ecommerce in South East Asia, recorded over 90% year-over-year order growth for the quarter ended June 30, 2021.

  • It said Lazada’s investments in technologies to improve user experience and recommendations on its mobile app have resulted in stronger consumer mindshare and user stickiness, as evidenced by improving the frequency of visits by users for the last six consecutive quarters.

  • Alibaba’s video platform Youku’s daily average subscriber base increased 17% year-over-year, which is driven primarily by our quality content offerings.

  • It said Youku continued to improve its operational efficiency through disciplined investment in content and optimization of subscriber membership programs that resulted in the narrowing of losses year-over-year during the quarter.

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