Alibaba revenue growth seen slowest on record

By Yomna Yasser On Jan 25, 2016

Chinese e-commerce giant Alibaba Group Holding Ltd is expected to post its weakest quarterly revenue growth on record, Thomson Reuters data shows a slowdown, analysts say will heat up the battle with smaller rival JD.com Inc in a tougher economy.

Alibaba’s revenue for the quarter ending December is projected to grow at 26.6 percent, according to a Thomson Reuters SmartEstimate survey of 28 analysts, which would be the slowest rate since the company started publishing such data 3-1/2 years ago.

The pace also lags the 47-51 percent revenue growth JD.com projected for the same period, which is also the slowest expansion since the company started releasing records.

Alibaba and JD.com declined to comment, citing the pre-earnings quiet period.

“When the market starts to slow you start to have real winners and real losers,” said Brian Buchwald, chief executive of consumer intelligence company Bomoda. “I think that they need to pay attention to their immediate competition.”

JD.com has focused on more affluent shoppers in China’s biggest cities, a strategy that may be paying off in an economy that last year grew at its weakest pace in a quarter of a century..

While the two companies calculate the total value of goods sold – known as gross merchandise volume (GMV) – differently, JD.com’s GMV grew 82 percent in the nine-months to September while Alibaba’s rose 34 percent, suggesting China’s biggest e-tailer was losing market share.

Earlier this month, Alibaba Chief Executive Daniel Zhang said the company will pivot towards these “first-tier” cities like Beijing, Shanghai, Shenzhen and Guangzhou, after having trumpeted a push into China’s countryside, as well as abroad.

In an article on Alibaba’s blog page, Zhang also said the company was seeking to retain and win over more customers by “enhancing reputation and optimizing user experience”.

This may be a tough ask, as quality concerns still dog Alibaba and as JD.com has already carved out its own space in these cities by offering speedy delivery and quality assurances.

“They have faster shipping speeds, and the quality is more trustworthy,” said Zoe Li, who works at a tech start-up in Beijing, referring to JD.com compared to Alibaba.

Last month, the Chinese e-commerce giant avoided being named on a U.S. blacklist for sites hosting the sale of fake goods, and appointed a new head of anti-counterfeiting.

Source: Reuters