Alibaba’s earnings soar as China’s love affair with online shopping continues

E-commerce giant raises annual revenue estimates after Q2 sales rise to US$8.3b. Now attention turns to Nov 11 and its Singles’ Day shopping festival, which is again expected to smash previous spending records

PUBLISHED : Thursday, 02 November, 2017, 8:28pm
UPDATED : Thursday, 02 November, 2017, 11:29pm

Alibaba Group has raised its full-year revenue estimates after beating analyst forecasts with a 61 per cent surge in second-quarter revenues.

The e-commerce giant is now predicting between a 49-53 per cent – up from 45-49 per cent – rise in annual revenue, after it invested an additional US$803 million in logistics affiliate Cainiao to attain a 51 per cent majority stake.

Alibaba’s July-September quarterly sales rose to 55.1 billion yuan (US$8.3 billion), surpassing the 52 billion yuan consensus estimate in a Bloomberg survey. Net income rocketed 146 per cent to 17.4 billion yuan during the period.

The result comes just under a week before it hosts what has become the world’s largest online shopping festival by value, its flagship “Singles’ Day”, which last year racked up a record US$17.8 billion worth of transactions in just 24 hours.

Most of the Hangzhou-based company’s revenue came from its core commerce business, which jumped 63 per cent compared with the same period last year, to 46.5 billion yuan.

That includes online marketplaces Taobao and Tmall, as well as Alibaba’s international business units including its western-facing shopping app AliExpress and Lazada, the Singapore-based e-commerce company in which Alibaba increased its stake to 83 per cent stake in June this year, which is focused on Southeast Asian sales.

Lazada has been working closely recently with Taobao to expand its “Taobao Collection” into Indonesia, the Philippines and Thailand, allowing consumers to buy items directly from Taobao through Lazada.

Previously, its offerings were limited to the Singapore and Malaysia markets. Lazada’s sales rose 115 per cent to 2.9 billion yuan from last year.

“One of our top initiatives is enabling Chinese brands to sell directly to consumers around the world,” said Daniel Zhang Yong, Alibaba chief executive, in an earnings call with analysts and journalists. “Globalisation continues to be a top growth driver.”

Singles’ Day has become a global online shopping phenomenon, taking place on November 11.

Shops on Alibaba’s Taobao and Tmall sites will again be tempting buyers with hefty discounts on hundreds of thousands of products from over 140,000 brands, as millions of consumers at home devote their day to retail therapy.

Last year’s record US$17.8 billion worth of transactions is expected to be surpassed this year, according to analysts. Alibaba is also offering free shipping to Hong Kong, Macau and Taiwan consumers as it looks to expand the shopping festival outside the mainland.

Alibaba now claims as many as 549 million people use the Taobao and Tmall shopping apps on their smartphones monthly, an increase of 20 million from June this year.

Elsewhere in the quarterly update, Alibaba’s cloud computing unit – Alibaba Cloud – reported revenue almost doubled to 3 billion yuan compared with the same time last year, as the company saw “significant traction and diversification of customers and revenue”.

Video subscriptions for Youku, Alibaba’s video platform, grew 180 per cent compared over the same period last year, as the company continues to pump money into snapping up licensed content and developing its own.

Alibaba’s share price closed at US$186.08 in New York on Wednesday, ahead of the earnings results. The stock has more than doubled in value since the beginning of the year.