Alibaba eyes ‘twin flywheels’ of consumer and industrial internet for growth as new consumers shrink in China
- Taobao Deals is a key piece of the puzzle, with Alibaba seeing it as a bridge to less affluent consumer groups, helping it to take on rival Pinduoduo
- Growth at Alibaba Cloud remained strong despite the loss of a ‘top client’ overseas
Alibaba Group Holding is speeding up its transformation from an online shopping site into a tech platform underpinned by both consumer and industrial internet businesses after paying a record fine of 18.2 billion yuan (US$2.82 billion) earlier this year to China’s antitrust authority, according to company executives and industry analysts.
Alibaba, owner of the South China Morning Post, is embracing both consumer and industrial internet businesses and venturing into new growth areas, said Daniel Zhang Yong, chairman and chief executive officer of the Hangzhou-based e-commerce giant.
“For our China retail marketplaces, a key strategic area for our incremental investments is to evolve from one super app of mobile Taobao into a multi-app product matrix,” Zhang said on a call with analysts on Tuesday after the company’s June quarter financial results were released.
The company’s bargain marketplace Taobao Deals is a key piece of the puzzle, with Alibaba seeing it as a bridge to less affluent consumer groups and rural areas, helping it to take on rival Pinduoduo.
“Its highly synergistic ecosystem enables it [Alibaba] to ramp up in lower-tier cities and local services,” Jefferies analyst Thomas Chong said in a report published on Tuesday. Penetration of small cities and towns will be a “key priority on user base expansion and wallet share gain”, he added.
Taobao Deals, with a user base of 190 million, added 10 million new users in the June quarter. Alibaba as a whole wants to hit one billion users this fiscal year, allowing it to serve nearly every Chinese internet user.