Alibaba must align operations in line with consumer preferences to maintain dominance, says GlobalData

Despite the Chinese government’s scrutiny over privacy and data security concerns, domestic e-commerce giant Alibaba Group reported a 34% growth in revenues to RMB205.74bn (US$30.4bn) for the quarter ended in June 2021. Alibaba must continue to adjust its operations and deals according to the constantly evolving consumer preferences and shopping habits to maintain its dominance in the highly competitive e-commerce market, says GlobalData, a leading data and analytics company.

However, the company’s Y-O-Y adjusted EBITDA slid by 5% due to its continued investments in diversified business domains, which will help it to attract a new customer base.

Alibaba has benefitted immensely from the online mode with the latest figures suggesting an increase of 45 million customers compared with the previous quarter, taking the count of annual active consumers on Alibaba’s website to 1.18 billion in the 12 months ended June 2021.

Ankita Roy, Retail Analyst at GlobalData, comments: “While Alibaba’s revenue growth was quite strong during the first quarter, it was less than the previous forecast of RMB209bn. Eventhough, the company continues to excel in its e-commerce business, the discrepancy between the actual revenues and forecasts occurred due to the slowdown of other business units such as cloud services.

“Alibaba must continue to advance operations and expand its footprints in new addressable markets, like the recently added initiative to target consumers in low-tier cities to benefit from the rapidly growing Chinese e-commerce market. Although the company dominates the Chinese e-commerce market, new players such as Pinduoduo and social media platform WeChat are gaining popularity on account of their innovative marketing strategies.”

In April 2021, Alibaba was the first Chinese tech company to be scrutinized by the Chinese government over data security fears. As a result, the company had to bear a fine of US$2.8bn against anti-competitive practices. This led to the company suffering an operating loss during the January-March quarter. However, the increase in revenue during the latest quarter indicates that the impact of the government crackdown on China’s tech giants was not significant on Alibaba’s e-commerce business.

Ms. Roy concludes: “The company’s latest move to increase investment in Idle Fish, China’s largest second-hand digital marketplace, will help it to reach those customers who intend to buy second-hand products. Similar initiatives will enable the retailer to maintain dominance over the coming years.”

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