Alibaba’s fourth quarter results not only beat expectations but must surely be the envy of others – especially given its exposure to China.
The ecommerce giant continues to defy the sceptics, and is becoming increasingly adept at monetising its users.
In the quarter to December 31, sales jumped 32% as more and more Chinese did their shopping online.
Singles’ Day (November 11) – the biggest online shopping day of the year in China – contributed $14.3bn in sales, up more than 50% from the $9.3bn generated during the 2014 event.
This, combined with a push into rural China, helped the company defy the slowing domestic economy.
Gross merchandise value (GMV – the value of products sold on its retail platforms including Taobao and Tmall) jumped 23%, driven by this focus on the rural Chinese shopper.
Alibaba’s strategy to improve the quality and GMV of its Tmall platform, removing counterfeit goods from Taobao and increasing the monetisation of its platforms appears to be paying off.
The ability to increase earnings from each transaction hosted on its marketplaces will drive further profits.
Mobile sales accounted for 68% of Alibaba’s GMV during the quarter, compared to 42% the previous year.
”Alibaba is set to strengthen its presence as an international player by making shopping online more accessible through mobile, simple through payments and more convenient through fulfilment”
During the period, Alibaba sustained improvements in monetising mobile customers.
This is a positive sign considering these users increasingly comprise the majority of its overall customer base.
Planet Retail remains positive about Alibaba’s prospects. E-commerce is set to be a huge beneficiary of the enduring strength of China’s domestic consumption for the next decade, backed by a growing middle class.
Through enhancing its marketplace capabilities and attracting domestic and international vendors, while increasing monetisation to boost cash generation, Alibaba is well placed to fully capitalise here.
Cloud computing upside
When you then consider further upsides from its cloud computing business, payments provider Alipay, and the creation of propriety fulfilment capabilities, among the many other strings to its bow, the future truly seems filled with promise for the business.
These results are testament that Alibaba’s model of providing vendors with high savings and shoppers with low prices will continue to drive growth.
Alibaba is set to not only defy domestic macroeconomic impacts but strengthen its presence as an international player by making shopping online more accessible through mobile, simple through payments and more convenient through fulfilment.
Given future prospects, the doubters might be silent for a while.