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Digital Transformation Brand Strategy Ecommerce

Alibaba Q3 revenue rises, but slower than expected as China clamps down on big tech

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By Shawn Lim | Reporter, Asia Pacific

November 19, 2021 | 5 min read

Alibaba has announced its revenue rose by 29% to 200.7bn yuan ($31.4bn) in the three months to the end of September – its slowest rate of growth for a year-and-a-half.

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Alibaba recorded single-digit physical goods merchandise value (GMV) year-over-year growth

The e-commerce giant also expects its annual revenue to grow by between 20% and 23%, lower than analyst forecasts.

Daniel Zhang, the chief executive of Alibaba, pointed to increasing competition and slowing consumption in China as the main causes of this weaker growth.

He also noted Chinese shoppers have become more cautious about spending, with new coronavirus outbreaks, power shortages and concerns about the property market weighing on sentiment.

Alibaba is also feeling the effects of Beijing’s efforts to crackdown on the country’s big tech, with a national campaign taking aim at what it perceived as major issues in the digital industry.

The six-month-long campaign to address the ‘tough problems’ of the internet industry – including disturbing market order, infringing users’ rights, threatening data security and unauthorized internet connections – resulted in the creation of China’s new personal data law, The Personal Information Protection Law (PIPL), which came into effect on November 1.

“This quarter, Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” said Zhang.

“Our global annual active consumers across the Alibaba Ecosystem reached approximately 1.24 billion, with a quarterly net increase of 62 million consumers, and we are on track to achieve our longer-term target of serving 2 billion consumers globally.”

Highlights from Alibaba’s September quarter 2021 results

  • For the 12 months to September 30, 2021, there were approximately 863 million annual active consumers (AACs) on Alibaba’s China retail marketplaces and New Retail businesses, with an increasing percentage of new consumers from lower-tier cities.

  • Alibaba recorded single-digit physical goods merchandise value (GMV) year-over-year growth, primarily due to slowing market conditions and more players in the China e-commerce market. By categories, physical goods GMV growth was slower in the apparel and accessories category, but continued to be resilient in the consumer electronics and home furnishing categories.

  • Taobao Deals continues to exhibit user growth by providing consumers with more food and beverage offerings sourced from Alibaba’s community marketplaces business, and reducing delivery costs as well as improving the delivery experience for consumers in lower-tier cities.

  • For example, Taobao Deals launched programs that incentivize bundling purchases of products delivered from self-operated warehouses, which reduce costs and improve the delivery experience for consumers.

  • There were over 240 million AACs on Taobao Deals, with an increasing percentage of new consumers from lower-tier cities.

  • Alibaba’s international commerce retail business, which includes Lazada, AliExpress, Trendyol and Daraz, achieved approximately 285 million AACs in the 12 months, representing a quarterly net increase of 20 million.

  • Both international commerce retail and international commerce wholesale saw a year-over-year revenue increase of 34% to RMB15,092m (US$2,342m).

  • Lazada – Alibaba’s South East Asia e-commerce platform – recorded over 82% year-over-year order growth for the quarter ended September 30, 2021.

  • Trendyol, an e-commerce platform in Turkey, recorded GMV growth of over 80% year-over-year based on the constant currency in the quarter ended September 30.

  • In the September quarter, Alibaba’s streaming platform Youku’s daily average subscriber base increased 14% year-over-year.

  • Alibaba’s movie production house Alibaba Pictures participated in the production and distribution of almost all of China’s major box office hits during the Golden Week holiday in October.

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