Alibaba is forecasting slower growth as consumption in China remains down. In fact, the eCommerce company expects its annual revenue to rise more slowly than any time since its stock market debut in 2014, Reuters reported Thursday (Nov. 18).
During an earnings call Thursday, Alibaba CEO Daniel Zhang also pointed to increasing competition as a factor in the decline, the report said.
Reuters noted that a regulatory crackdown by the Chinese government has affected Alibaba and other tech firms there — along with new COVID-19 outbreaks and supply disruptions.
For the quarter ended Sept. 30, Alibaba’s revenue grew 29% year over year, which was the company’s slowest growth rate in six quarters, according to the report.
A Growing Number of Active Consumers
Alibaba Group Holding Ltd.’s active consumers hit 1.24 billion, up by 62 million for the quarter, PYMNTS reported.
Read more: Alibaba Group Active Consumers up 62M in Q3
“This quarter, Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” Zhang said in the earnings report.
The company attributed its 29% revenue growth year over year to the performance of its diversified businesses, Chief Financial Officer Maggie Wu said in the quarterly update.
“During this quarter, our continued investments in key strategic areas have resulted in robust growth for these young businesses,” she said.
A Slower Singles Day Due to Economic Challenges
The earnings report came on the heels of the recent Singles Day in China — the world’s biggest multi-day shopping extravaganza — during which Alibaba and JD.com together posted record online sales. Still, that wasn’t enough to buoy an otherwise sluggish event as overall sales growth for merchants was in the single digits.
Also read: JD.com, Alibaba Sales Not Enough To Boost China’s Sluggish Singles Day
Still, this year, a record 290,000 brands and 900 million consumers participated in the event, which was started by Alibaba in 2009 as a day to celebrate singlehood. And 78 businesses saw their gross merchandise value grow over 10 times more than last year.
As with the Nov. 18 earnings report, Singles Day’s weaker results were attributed to a combination of issues — China’s continuing crackdown on Big Tech and an associated tightening of regulations, reduced inventory due to supply chain snags and consumer concerns about economic stability.
A Disruption in North America Too
During a Nov. 3 interview with PYMNTS CEO Karen Webster, Alibaba.com President of North America and Europe John Caplan said the great supply chain snarl has been the hallmark of North American operations, as well.
“There’s a perfect disruption happening all at once,” Caplan said.
See: Alibaba’s John Caplan: The Age of the B2B Digital Marketplace Is Upon Us
With a ground-level view of what’s been happening to small and medium-sized businesses (SMBs) in North America, Caplan noted that demand from end consumers is high, logistics are snarled, container ships are lining up outside ports and factories, and trucking firms are short-staffed.
“It used to be that these firms would run their businesses in an analog way with ‘a little bit’ of digital,” he said. “But now being fully digital is a strategic imperative for SMBs, whether you’re a buyer or seller of goods to other businesses around the world.”
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