Alibaba aims for block­buster Sin­gles’ Day as it pre­pares for next chap­ter af­ter Ma

Calgary Herald - - FINANCIAL POST - LULU YILUN CHEN

HONG KONG For a shop­ping cel­e­bra­tion called Sin­gles’ Day, Alibaba Group Hold­ing Ltd. sure does lump to­gether a lot of dif­fer­ent things.

This Sun­day, the in­ter­net gi­ant is in­clud­ing much more than just on­line mer­chan­dise sales. In ad­di­tion to web pur­chases, it in­clude sales from a host of off­line ac­qui­si­tions it has made. That means in­come from shop­ping malls, con­ve­nience stores and food de­liv­ery busi­ness Ele.me will be part of the tally for the first time.

The chal­lenge for bil­lion­aire Jack Ma’s on­line empire is to break an­other sales trans­ac­tion record af­ter a decade of ex­ceed­ing prior re­sults. With a brew­ing trade war, a cool­ing econ­omy and ris­ing com­pe­ti­tion from smaller plat­forms such as JD.com Inc. and Pin­duo­duo Inc., Alibaba is seek­ing to add new growth en­gines. The re­tail cel­e­bra­tion on Sun­day ded­i­cated to the na­tion’s un­at­tached has be­come an im­por­tant bell­wether not just for the com­pany, but also the world’s No. 2 econ­omy.

“Sin­gles’ Day has now be­come a stage for Alibaba to show­case its ca­pa­bil­i­ties across all its plat­forms,” Daniel Zhang, chief ex­ec­u­tive of­fi­cer, said at an Oc­to­ber news con­fer­ence in Bei­jing. He’s tak­ing over af­ter Ma steps down as ex­ec­u­tive chair­man next year.

It was Zhang who came up with the idea of turn­ing Sin­gles’ Day into a shopfest a decade ago. Now that this year’s one-day bazaar will be Ma’s last as chair­man, Zhang will need to prove he can carry on the legacy. “We think one bil­lion pack­ages will be­come a daily event in the fu­ture,” he said.

More than half a bil­lion peo­ple are pro­jected to visit Alibaba’s web­sites in search of Dyson hair dry­ers, in­fant for­mula and Gucci bags. Alibaba has been able to post break­neck growth for al­most a decade, in­clud­ing a 39-per-cent jump in sales last year to 168 bil­lion yuan (US$24.2 bil­lion).

Still, there’s some un­cer­tainty this year, due to a slow­ing econ­omy, real es­tate de­fla­tion and trade ten­sions with the U.S. that could im­pact on Chi­nese con­sump­tion. The weaker econ­omy and ris­ing house­hold debt have, to some ex­tent, damp­ened con­sumers’ con­fi­dence in China.

On­line re­tail sales growth slowed to 24 per cent, down 12 per cen­t­age points in the sec­ond quar­ter, ac­cord­ing to the Na­tional Bureau of Statis­tics. Pol­icy-mak­ers have made a slew of changes, in­clud­ing re­duc­tions in in­come tax and tar­iffs on goods. That in­di­cates spend­ing may pick up in com­ing months; the ear­li­est proof could come from data dur­ing Sin­gles’ Day.

Last week, Alibaba re­ported quar­terly profit and sales well above an­a­lysts’ es­ti­mates, while trim­ming its pre­dic­tion for ful­lyear sales by as much as six per cent, with Ma warn­ing that the eco­nomic con­flict be­tween the world’s two largest economies could last 20 years.

To fuel growth, Alibaba is ex­pand­ing its play­book. Ele.me, the startup it took con­trol of this year, will pro­vide de­liv­ery ser­vices for se­lect Star­bucks stores across 11 ci­ties in China. Ru­ral Taobao will of­fer coupons for goods across 800 coun­ties, and Lazada will roll out pro­mo­tions across six south­east Asian coun­tries in­clud­ing In­done­sia, Malaysia and Thai­land.

Al­though it’s been three years since Ma said he wants to make Sin­gles’ Day a global shop­ping event, that hasn’t hap­pened yet. In­ter­na­tional ex­pan­sion will be a key part of Zhang ’s plan to keep break­ing sales records. Last year, Rus­sia, Hong Kong and the U.S. were the top three re­gions out­side of main­land China to buy goods dur­ing the an­nual event. Pop­u­lar items pur­chased over­seas in­cluded mo­bile phones, wool coats and knit­ted sweaters, ac­cord­ing to the com­pany.

At the same time, Alibaba’s ef­forts to push into the U.S. are sput­ter­ing. It dis­carded a pledge to cre­ate a mil­lion jobs in the coun­try, lost its top U.S. deal-maker and jet­ti­soned plans for af­fil­i­ate Ali­pay to ac­quire Money­Gram. U.S. Pres­i­dent Don­ald Trump said in Oc­to­ber that he plans to with­draw from a 192-na­tion treaty that gives Chi­nese com­pa­nies dis­counted ship­ping rates for small pack­ages sent to Amer­i­can con­sumers, mak­ing it harder to push into the mar­ket.

South­east Asia will give the clear­est in­di­ca­tion of Alibaba’s abil­ity to go in­ter­na­tional. With Sin­ga­pore­based Lazada now fully un­der its wing, the re­gion re­mains one of the com­pany’s rel­a­tive bright spots, amid a back­drop of slow­ing growth in China and tur­moil brought on by the es­ca­lat­ing trade war.

The slump in China’s ad­ver­tis­ing sec­tor is also hurt­ing Alibaba. A sig­nif­i­cant chunk of rev­enue comes from mer­chants spend­ing money across the e-com­merce gi­ant’s plat­forms to lure cus­tomers. That item, which falls un­der the cat­e­gory “cus­tomer man­age­ment rev­enue,” rose 26 per cent in the lat­est quar­ter, com­pared with 35 per cent in the prior pe­riod.

“The macro slow­down has af­fected ad­ver­tis­ers’ sales per­for­mances and thus their on­line ad spend­ing bud­gets,” Ella Ji, an an­a­lyst at China Re­nais­sance, wrote in a re­port.

NG HAN GUAN/AP

Shop­pers walk by a pro­mo­tion in Bei­jing on Wed­nes­day by Alibaba’s Tmall on­line shop­ping plat­form for the up­com­ing Sin­gles’ Day. Alibaba is look­ing to break an­other sales trans­ac­tion record Sun­day af­ter a decade of ex­ceed­ing prior re­sults with its shop­ping cel­e­bra­tion

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