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Growth concerns rise for Alibaba [GCTL Insights Magazine (China)](GCTL Insights Magazine (China) Via Acquire Media NewsEdge) HANGZHOU, Jun 23 (GCTL) - Alibaba Group Holding Ltd, China's e-commerce conglomerate, disclosed in an updated filing on Monday that quarterly revenue growth slipped to its slowest pace in six years, amid concerns that the development may cast a shadow on its highly anticipated initial public offering in the United States. The Hangzhou-based e-commerce giant reported lower revenue growth of 39 percent year-on-year between January and March in its revised filing to the US Securities and Exchange Commission on Monday. The company's growth rate was 71 percent in the same quarter last year. Operating margins narrowed to 45 percent from 51 percent in the previous year. The group's revenue during the first quarter was 12 billion yuan ($1.92 billion). A growth rate of 39 percent would be considered robust for most companies, but for Alibaba Group, which owns China's largest customer-to-customer platform, Taobao, and the country's largest business-to-customer platform, Tmall, the slowing momentum has triggered concerns ahead of its much-anticipated initial public offering in the United States. The reported first-quarter growth of 39 percent also marked the first time that Alibaba Group has posted a quarterly revenue increase of below 40 percent since Yahoo Inc, one of its major shareholders, began disclosing results in 2008. Zhuo Saijun, an e-commerce analyst with the Beijing-based consulting firm Analysys International, said Alibaba's revenue decline in the first quarter was not surprising, China Daily reported. "Alibaba's Nov 11 shopping festival pushed many merchants to increase their online marketing spends during the fourth quarter of 2013. This has led to overdrawn marketing budgets in the first quarter," he said. Zhuo added that Alibaba still dominates China's e-commerce market, but research has shown that its market share is shrinking. "The shrinking is not that significant, but it shows the general trends of competition," he said. Meanwhile, Chinese online retailers are bracing themselves for a new round of cutthroat competition after the country's second-largest e-commerce player, JD.com Inc, launched a promotional campaign offering discounts and incentives worth 1 billion yuan. The 20-day promotional campaign in June was created by JD.com in 2010 as an annual shopping event to celebrate its birthday on Wednesday. Many Chinese retailers have followed suit with similar campaigns. Industry sources, however, feel that JD's shopping party cannot match up to Alibaba's Nov 11 shopping festival, which netted sales of 15 billion yuan during the 24-hour sales event. Forrester Research's Senior Analyst Vanessa Zeng said that: "JD's campaign is similar to Taobao/Tmall's Singles Day event for boosting sales revenue. However, its timing is not ideal, as it clashes with the 2014 FIFA World Cup in Brazil. Advertising and promotional effectiveness of the campaign has been diluted as the soccer event will grab more eyeballs than the JD event." Despite the bad timing, the JD campaign doesn't mean that JD is not in the same league as Alibaba in terms of e-commerce competition. Analysts said that with JD's recent initial public offering in the United States and the investment and the resources it has received from Tencent Holdings Ltd, China's e-commerce market has entered a new stage of dual-leadership. Mo Daiqing, senior e-commerce industry analyst at the Hangzhou-based research company China e-Business Research Center, said JD's recent IPO in the US and the resources it has received from Tencent have made the Beijing-based e-commerce player a strong competitor. (c) 2014 FocusAsia Media Ltd. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |