China internet giant Alibaba eyes global retail expansion as quarterly results shine

Alibaba’s active buyers hits record 407 million by end December; net profit soars 111 per cent

PUBLISHED : Thursday, 28 January, 2016, 9:54pm
UPDATED : Thursday, 28 January, 2016, 9:54pm

Alibaba Group, the world’s largest e-commerce services provider, is pushing for broader domestic and international online retail expansion this year, emboldened by hefty user growth that saw its annual active buyers reach a record 407 million at the end of December.

“Our proven ability to deliver an unparalleled consumer experience and to help merchants attract, engage and retain buyers will drive future growth in our core business,” Alibaba chief executive Daniel Zhang Yong said in an announcement before the opening of the US market.

New York-listed Alibaba last night reported a 111 per cent jump in net profit to 12.498 billion yuan in its fiscal third quarter ended December 31, up from 5.936 billion yuan in the same period in 2014, on the back of robust customer growth in its online retail platforms on the mainland.

Revenue increased 32 per cent to 34.543 billion yuan from 26.179 billion yuan a year earlier.

Both Alibaba’s net profit and revenue in the three months to December were up from market analysts’ consensus estimates of 10.280 billion yuan and 32.934 billion yuan, respectively, according to a CCB International report.

Maggie Wu, the chief financial officer at Alibaba, pointed out that quarterly revenue also advanced because of a strong rise in mobile e-commerce transactions. The company’s mobile revenue rose 192 per cent year-on-year to 18.746 billion yuan in the quarter to December.

The gross merchandise volume (GMV) -- the total value of goods sold on its e-commerce platforms -- on mainland China grew 23 per cent year-on-year to US$964 billion, with mobile GMV accounting for 68 per cent of that total.

Alibaba cited Koubei, the daily deals joint venture it recently established with Ant Financial, gained strong momentum to generate about 15.8 billion yuan in GMV during the December quarter, with daily transactions averaging more than 5 million.

That strong performance may have contributed to Alibaba’s reported decision to sell its stake in Meituan-Dianping, the mainland’s largest online-to-offline (O2O) services provider. Meituan-Dianping was formed from two start-ups separately backed by Alibaba and Tencent Holdings.

Alibaba has agreed to sell its stake in Meituan-Dianping for US$900 million to a group of investors, according to a Wall Street Journal report which cited sources familiar with the deal.

A spokeswoman for Alibaba in Hong Kong declined to comment.

Meituan-Dianping, which offers services such as finding deals at restaurants and booking cinema tickets via smartphone, last week raised more than US$3.3 billion in new funding.

“The fundamental strength of our core business gives us the confidence to invest in our strategic priorities,” Wu said.

Those priorities include ratcheting up its operations in mainland China’s largest cities, rural expansion, increased global imports and building a world-class cloud computing business.