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Alibaba boom in sales between October and December 2018: +41%

February 15, 2019


Abstract : The economic slowdown in China does not affect the e-commerce giant, which has also registered record profits and a customer base of 700 million highly growing individuals in smaller settlements. The record performances are merit of the...

The economic slowdown in China does not affect the e-commerce giant, which has also registered record profits and a customer base of 700 million highly growing individuals in smaller settlements. The record performances are merit of the cutting-edge technologies of Taobao and Tmall platforms including the two most successful apps, Alipay and Taobao App.

Boom of consumption, turnovers and profits on all sides, B2B, BTC, specialized platforms and ancillary services, for the Chinese global e-commerce giant, Alibaba, between October and December, in the perhaps more performing quarter of its recent history. This disproved the fears of those who feared that the slowdown in the Chinese economy could negatively affect the performances of multinational consumer goods.  

Turnovers in the three months grew by 41% compared to the same period of the previous year, reaching 117.28 billion yuan (17.5 billion dollars), compared to 83.03 billion last year, a little level under the expectations of analysts (119.03 billion).

Adjusted EBITDA slightly surpassed 40 billion yuan ($5.9 billion), thus marking a profitability level of the business (EBITDA margin) of 35%, slightly lower than the 44% of the previous year.

Net profit jumped 37% to 33.05 billion yuan, clearly outperforming analysts' expectations to 21.43 billion.

"These results are a direct consequence of our constant focus on the best services for our customer base, that is almost of 700 million people, including retail, digital entertainment and local consumer services," said Daniel Zhang, 47, CEO of the Alibaba Group since 2015, that next September 10 will become executive president taking the place of Jack Ma, the founder, who will retire from the company, with a substantial package of shares. "This growth was made possible by our cloud technologies and data processing that are enabling the digital transformation of millions of enterprises". 

"The 7.5 billion dollars of free cash flow generated in this quarter (the third, because the fiscal year of Alibaba closes March 31, ed.) will allow us to invest further in other strategic businesses and technologies to produce new growth", Said Maggie Wu, cfo of the group. 

Consumers active on the group's platforms rose from 515 million at the end of 2017 to 636 million at December 31st 2018, while monthly users of mobile services were at the end of last December 699 million, compared to 580 million in 2017.

An interesting data is that on the Taobao platform, where the mobile customers reached 699 million, the 70% of increase of active customers was generated in the so-called Chinese cities of third tier and from the even more small settlements, and apps that made this happen are Alipay, therefore the payment system, the Taobao App that aims to customise the offer in order to get the attention of the fortuitous customers or those who visit the website for the first time. 

The success of Tmall, where the gross market value of the sold products grown of 29%, always in the same period, is due above all to the products widely consumed, the so-called fast moving consumer goods, to clothing and furniture. 

One of the initiatives of greater success in the quarter was the so-called Singles' Day, or Global shopping festival, the promotion opened on November 11, that registered a volume of transactions equal to the Black Friday and the Cyber Monday.

In the 24 hours transactions on Alipay have reached the figure of 213.5 billion yuan, 27% more than in 2017. A 40% of Chinese users, therefore 280 million of people, have purchased international brands and the opposite resident consumers in 230 countries or regions other than China have bought via Alipay on the platforms, taking advantage of better exchange rates than official ones.  

The turnover of the cloud-computing business also grew by 84% to 6.61 billion yuan, while that of the digital-media and entertainment division, which includes Youku Tudou and Alibaba Pictures Group, rose by 20% to 6.49 billion yuan.

What most impresses the observers in the record quarter of Alibaba is the acceleration of the strategy towards the so-called New Retail, which consists basically in the digitalization of the basic operations of a traditional store. Alibaba provides small retailers with the opportunity to switch to digital, improving efficiency in the management of merchandise stocks, suppliers, improving on-demand deliveries, and the availability of smartphone payments. Last December, Alibaba's new retail format was extended to 470 Sun Art stores, whose customers can now place orders through the Taobao app. 

Another rapidly growing segment in sales is in the chain owned by the grocery Freshippo, 109 self-operated stores located mainly in the one and two-tier cities. 

Another area of action for Alibaba is the Koubei platform, dedicated to catering, which in December was integrated with Ele.me, the food on-demand delivery service, to give life to the local consumer service, a strategic business and in strong growth that was financed with a 3 billion dollar injection of capital by Alibaba, Softbank and third party investors.  

In addition to these diversified activities, a major boost was also made by the Cainiao Network logistics platform, which on November 11 was able to deliver 1 billion orders. from this network, Alibaba is able, inter alia, to gather valuable data on the evolution of Chinese consumption, for example on the growth of imports of high quality products from Japan, the United States, South Korea, Australia and Germany, the top 5 countries in sales of the Global shopping festival. 

(Source:Class Editori)

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