Alibaba eyes ‘twin flywheels' of consumer and industrial internet for growth as new consumers shrink in China

Alibaba eyes ‘twin flywheels’ of consumer and industrial internet for growth as new consumers shrink in China

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.

But as China’s e-commerce market becomes saturated, Alibaba is under pressure to generate more revenue per consumer to maintain business growth. Its revenue rose 34 per cent 205.7 billion yuan in its fiscal quarter ended June 30 while net income for the quarter fell 8 per cent year on year to 42.8 billion yuan.

The drop in net income was partly due to the company’s investment in local services and community group buying as it competes with on-demand services giant Meituan, another tech firm that is currently under China’s antitrust investigation.

Alibaba has merged its food delivery platform, navigation service provider Amap and online travel booking platform Fliggy into one new unit, whose name in Chinese means to “fly high” when the first character of each service name is combined. recorded strong growth of over 50 per cent year-over-year in the quarter ended June 30, and Alibaba wants to expand delivery services to non-food areas.

Meanwhile, the gross merchandise volume (GMV) of Alibaba’s community group buying service expanded 200 per cent from the previous quarter as the gross floor area of its regional distribution centres rose 260 per cent.

Growth at Alibaba Cloud remained strong despite the loss of a “top client” overseas. Year-on-year revenue growth at the unit in the June quarter slowed to 29 per cent from growth of 37 per cent in the previous quarter. Maggie Wu, Alibaba’s chief financial officer, said Cloud’s revenue growth would have been closer to 40 per cent without the one-off client loss. Wu said that the company’s client base remains diversified.

Alibaba was the world’s third-biggest infrastructure as a service (IaaS) public cloud service provider last year, behind Amazon Web Services (AWS) and Microsoft’s Azure, according to a June report by research firm Gartner.

In a letter to shareholders on July 27, Daniel Zhang said “our early and unwavering bet in cloud computing gave us the opportunity to be at the forefront of our generation, and be a company driven by the twin flywheels of the consumer and industrial internet.”

News Related


World Bank discontinues business climate report after ethics review

The World Bank Group said on Thursday it has decided to discontinue publication of its “Doing Business” rankings of country business climates after a review of data irregularities in the ... Read more »

Banks' bad loan books to get cleaner with proposed bad bank framework, says experts

On September 16, Finance Minister Nirmala Sitharaman announced the setting up of a sovereign guarantee of up to Rs 30,600 crore for security receipts which will be issued by National ... Read more »

Bluesport Entertainment invests Rs 240 crore on upcoming Premier Handball League

Bluesport Entertainment Pvt. Ltd, the official license holders of the Premier Handball League (PHL) under the aegis of the Handball Federation of India (HFI), has announced an investment of Rs ... Read more »

For The First Time, Learn How to Create a Facebook Lead Ad Campaign

It can be intimidating to develop a Facebook Lead ad if you’ve never done it before. You’ll discover how to make your first lead ad campaign in this article. You’ll ... Read more »

Bad bank plan a welcome step, expect a gap-up opening for Bank Nifty tomorrow: Experts

The Union Cabinet’s decision to approve a government guarantee of up to Rs 30,600 crore for security receipts to be issued by National Asset Reconstruction Company Ltd (NARCL) is a ... Read more »

World Bank discontinues Doing Business reports — bank's statement

In June 2020, data irregularities on Doing Business 2018 and 2020 were reported Read more »

As Virat Kohli steps down as T20I captain, a look at what happened to brand Dhoni without captaincy

Virat Kohli Surpasses MS Dhoni To Register Most Test Wins As India Captain (Image: Reuters) The Board of Control for Cricket in India (BCCI) on Thursday announced that Virat Kohli ... Read more »

Avigna Industrial & Logistics Park to invest Rs 500-600 crore to develop a warehousing project in Karnataka

Expanding its industrial warehouses in the country, Avigna Industrial and Logistics Park, has ventured into Hoskote in Karnataka, with a 4 million sq ft Grade A warehousing facility and will ... Read more »

Yamal's gas production capacity 25% above planned — governor

At the same time, Dmitry Artyukhov continued, it is not clear whether gas production will grow next year Read more »

Ahmedabad Airport to be closed for runway repairs from January - May 2022

Sardar Vallabhbhai Patel International Airport, Ahmedabad. Image source: ANI Sardar Vallabhai Patel International Airport could be closed from 3rd January 2022 till May 31, 2022, from 9 am to 6 ... Read more »

How Picnic wants to conquer France and Germany with Bill Gates' millions

Just under two years after the previous investment round, online supermarket Picnic has again raised capital to continue growing. A group of old and new investors is investing 600 million ... Read more »

Gas price surge blamed for UK fertiliser factory shutdowns

Just a day after steelmakers reported disruption to production from soaring energy costs, it emerges that work has been suspended at two UK fertiliser plants. Read more »

A new defence alliance, fast fashion and the future of AI technology

Listen to “A new defence alliance, fast fashion and the future of AI technology.”. A new defence alliance could be a big financial blow for France – as Britain, the ... Read more »

Tobacco giant Philip Morris clinches shareholder backing for inhaler maker Vectura

PMI says the takeover is part of its "beyond nicotine" strategy and aim to become a "wellness" company - but critics fear it could see big tobacco wielding influence over UK health policy. Read more »

ASOS boss sets out sustainability goals

Read more »

John Lewis charters ships to navigate Xmas supply disruption and warns on price pressures

The retailer is no stranger to the sector's supply chain and hiring challenges in the run-up to the crucial Christmas season that seems set to see consumers facing tough spending choices as prices rise. Read more »

Fossil fuel firms sue governments across the world for £13bn as climate policies threaten profits

The majority of the cases are being brought under the Energy Charter Treaty, and are being hosted within the International Centre for The Settlement of Investment Disputes, a branch of the World Bank. Read more »

Why investors in three FTSE 350 firms are cheering the AUKUS security pact

Sky's Ian King says shareholders of Rolls-Royce, BAE Systems and Babcock clearly see hope of lucrative work arising from the sharing of information and resources under the deal. Read more »

Expert: Second Arktika-M satellite launch to assure entire Northern Sea Route coverage

The first special Arktika-M satellite was launched in February 2020 and another such satellite will be launched in 2023 Read more »

Defence Ministry issues SOP for faster verification of bank guarantees during acquisition process

Defence Minister Rajnath Singh The Defence Ministry on Thursday issued a standard operating procedure (SOP) that induces clarity in the steps a buyer has to take to verify bank guarantees ... Read more »

US market will surpass India's in the near future: MPL's Sai Srinivas

Indians love playing games on mobile phones, and home confinement during the pandemic has accelerated the trend. This has triggered a boom that helped Mobile Premier League (MPL), India’s latest ... Read more »

Google, Apple fail to explain their position to Russian senators

According to Deputy Head of Roskomnadzor Vadim Subbotin, the Apple representative was unable to explain the motive of the company’s actions and the Google representative had no power of appointment, so he was not questioned Read more »

Primark vows to make all clothing from recycled or 'more sustainable' materials by 2030

The fast fashion giant also promised to halve emissions, but environmentalists fear the plans are too light on detail. Read more »

Energy watchdog warns on 'record' prices as two more household suppliers fail

Ofgem warns households that gas prices are likely to be "high for some time" as an energy crunch threatens to push up bills further for customers whose fixed tariff deals are expiring. Read more »

NARCL a game-changer for India's bad debt resolution

The banking sector in India has played a pivotal role in the growth and development of the economy. By mobilising deposits and facilitating seamless credit flows, the banking sector is ... Read more »

Damian Lewis recalls filming on the day of 9/11

The Billions star is raising money with BGC in remembrance of the colleagues who were killed during the 9/11 attacks. Read more »

UBS Principal Capital Asia sells IndusInd Bank's shares worth Rs 354 crore

(Image: PTI) UBS Principal Capital Asia Ltd on Thursday sold IndusInd Bank shares worth nearly Rs 354 crore through an open market transaction. Bulk deal data with the BSE showed ... Read more »

9/11 anniversary: City veteran reflects on loss of colleagues

Read more »

Why are there supply shortages in UK?

There is estimated to be a shortfall of around 100,000 lorry drivers - triggered by an exodus of foreign nationals during the pandemic and post-Brexit immigration rules, which is affecting stock levels in supermarkets and fast food chains. Read more »

'The upper reaches of society are going to have to pay' - Sorrell

Read more »

'You can't keep raising business taxes without consequences' - CBI

Read more »

'Inevitable' that prices will rise - Wagamama owner

Read more »

'Major job losses' on the way at travel firms

Read more »

Vacancies are at a record high: Which sectors have the biggest gaps to fill?

Official figures show which parts of the UK economy have the highest and lowest rate of vacancies across their workforces and where the gaps have opened up most quickly - with hospitality and transport among them. Read more »

Fears people will 'struggle to get Christmas presents for their children' amid supply chain woes

Sky's Paul Kelso writes that the government has delayed introducing Brexit customs checks to stop the current global supply chain squeeze becoming a crisis. Read more »

West Midlands 'developing a real cluster sector'

Read more »