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This Sunday, the Chinese Internet giant is considering sales of Lazada, the online shopping center it controls. Southeast Asia's largest online retailer becomes a key part of Alibaba's plan to fuel growth, in addition to the company's efforts to enter malls, convenience stores and product delivery food.
The challenge of online billionaire Jack Ma's is to beat a new trading record after a decade of better results than those already achieved. With a brewing trade war, a slowing economy and increasing competition from smaller platforms such as JD.com Inc. and Pinduoduo Inc., Alibaba is looking to add new growth drivers. On Nov. 11, the country's homeless retail celebration has become an important indicator, not only for society, but also for the world's second-largest economy.
President of Alibaba, Michael Evans, said he was "not too concerned" by the US-China trade, which slowed Singles Day sales . "The 11/11 is not an event that relies exclusively on a market," Evans told Bloomberg TV in an interview Friday. "We will be working with more than 200 countries and regions as part of this huge event and therefore we do not expect that a single area will exert considerable influence, with the exception of China of course . "
On the Chinese economy, Evans said there was "some uncertainty about the future," while noting that growth in the country was still close to 6.5 percent. per year.
Alibaba has seen a decline in the demand for expensive items, such as washing machines, televisions and automobiles, said Evans. But other sectors, such as cosmetics, food, fashion and clothing, continue to experience strong growth. The company is focusing on the 300 million Chinese people expected to join the ranks of the middle class over the next five years, Evans said.
"Singles Day is now a milestone for Alibaba, which is showcasing its capabilities across all platforms," said Daniel Zhang, president and CEO, at a press conference in October in Beijing. He will take over after Ma's resignation as executive president next year. Find out how Singles Day has become the world's biggest shopping spree.
It was Zhang who had the idea of making the Singles Festival a festival of workshops ten years ago. Now that the one-day bazaar of this year will be Ma's last president, Zhang will have to prove that he is able to perpetuate his legacy. "We believe that one billion packages will become a daily event in the future," he said.
More than half a billion people are expected to visit Alibaba's websites looking for Dyson dyes, infant formula and Gucci bags. Alibaba has been able to experience dizzying growth for nearly a decade, including a 39% jump in sales last year, reaching 168 billion yuan (24.2 billion US dollars).
However, some uncertainties persist this year due to the slowing economy, property deflation and trade tensions with the United States that could affect Chinese consumption. The weakening economy and growing household indebtedness have, to some extent, weakened consumer confidence in China.
Growth in online retail sales slowed to stand at 24%, down 12 points in the second quarter, according to the National Bureau of Statistics. Decision makers have made many changes, including reductions in income tax and custom duties on goods. This indicates that spending could resume in the coming months; The oldest evidence could come from the data of the feast of singles.
Last week, Alibaba announced a quarterly profit and revenue well above analysts' estimates, while reducing its forecast for the year by 6% in annual figures.
To fuel growth, Alibaba is expanding its gaming book. Ele.me, the startup it has taken control of this year, will provide delivery services to select Starbucks stores in 11 cities in China. Rural Taobao will offer goods vouchers in 800 counties and Lazada will launch promotions in six Southeast Asian countries, including Indonesia, Malaysia and Thailand.
Although it's been three years since Ma did not want to make the Singles Festival a global trade event, it has not happened yet. International expansion will be a key part of Zhang's plan to maintain sales records. Last year, Russia, Hong Kong and the United States were the first three regions outside mainland China to buy products at this annual event. Popular items bought abroad include cell phones, wool coats and knit sweaters, according to the company.
At the same time, Alibaba's efforts to gain a foothold in the United States drag on. He gave up his promise to create one million jobs in the country, lost his main American negotiator and threw plans for the subsidiary Alipay to acquire MoneyGram. US President Donald Trump announced in October that he plans to withdraw from a 192-nation treaty that provides Chinese companies with discounts on shipping charges for small parcels sent to US consumers. makes it more difficult to penetrate the market.
Southeast Asia will provide the clearest indication of Alibaba's ability to internationalize. Lazada, headquartered in Singapore, is now fully under its wing, the region remains one of the strengths of the company.
The slowdown in China's advertising sector is also hurting Alibaba. A significant portion of revenue comes from traders spending on the e-commerce giant's platforms to attract customers. This item, which falls under the category of "customer management revenues", increased by 26% in the last quarter, compared to 35% in the previous period.
"The macroeconomic slowdown has affected the commercial performance of advertisers and therefore their online advertising spend budgets," wrote Ella Ji, an analyst at China Renaissance.
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