BEIJING — Chinese e-commerce giant Alibaba Group said Tuesday that second-quarter net profit grew more than seven times to $3.57 billion on a large financial gain while its revenue advanced 32 percent to $3.49 billion, exceeding expectations.
The market had been eagerly awaiting the company’s figures amid concerns about the health of China’s economy and consumers. China’s gross domestic product rose 6.9 percent in the three months through September from a year ago, marking the country’s slowest quarterly expansion of its economy since the first quarter of 2009.
“If the Chinese economy is growing gangbusters, are we going to benefit from this?” Alibaba vice chairman Joe Tsai said during an earnings call. “Absolutely we will. We just don’t think the current macro economic situation will fundamentally impact consumption patterns in a fundamental way. But it’s hard to say what the next quarter will look like.”
Alibaba’s revenue growth represents an acceleration from the 28 percent growth registered in the first quarter but a slowdown from the 53.7 percent growth posted in the year-earlier period.
GMV (gross merchandise volume) on Alibaba’s retail marketplaces rose 28 percent to $112 billion, slower than the 34 percent growth seen in the previous quarter and the 48.7 percent growth registered in the same period one year ago.
Mobile GMV accounted for 62 percent of the total. Executives say they expect consumption via mobile phones to soon rival or overtake shopping via personal computers. Alibaba is “winning in mobile,” Daniel Zhang, Alibaba’s chief executive officer, said.
Executives noted that categories, such as consumer electronics, large appliances and daily necessities, like food and beverage items, are growing in popularity.
Growth in Alibaba’s cloud computing and Internet infrastructure services also contributed to higher revenues, the company said. In August, Alibaba opened a data center in Singapore to serve regional and global customers.
Other major themes emerged during the e-commerce giant’s earnings call in terms of future strategy. Expanding into rural areas will continue to be key, with Alibaba already offering services to around 4,000 villages across China.
The company is also rapidly ramping up omnichannel retailing, forging partnerships with thousands of brick-and-mortar stores where consumers can order goods online ahead of Alibaba’s Single’s Day on Nov. 11, a major discounting and publicity blitz, and pick up their orders offline. Singles’ Day is now the biggest shopping day of the year worldwide, far eclipsing Black Friday and Cyber Monday in terms of dollars.
Tsai said the company sees the offline-to-online market as “huge.”
“We think this is a space that can accommodate several very significant players,” he said. “We see a very aggressive and competitive market right now.”
Executives also stressed the importance of globalization. The company is expanding its offices in London and opening an office in Milan. For Single’s Day, executives said more overseas merchants would be offering promotions to Chinese consumers seeking high-quality products, in particular imported food and household items.
Approximately 5,000 overseas brands from 25 countries and regions will participate in this year’s Single’s Day, according to Alibaba.
Alibaba continues to face criticism over the sale of counterfeits on its online market place Taobao. Earlier this month, The American Apparel & Footwear Association called for the e-commerce platform to be re-listed on a U.S. government counterfeit watch list.
Juanita Duggan, president and chief executive at the AAFA, happened to be in Hong Kong on Tuesday to address the American Chamber of Commerce and reiterated her grievances with the online retailer.
“In an official filing, Alibaba stated that we, AAFA, are asking them to change the fundamental aspects of their business model. Well, that’s true only if counterfeits are their business model,” Duggan said.
In other Alibaba-related news, the company has just bid $3.5 billion to buy the roughly 82 percent of Chinese online video company Youku Tudou Inc. that it does not already own. Alibaba executives said the potential acquisition would help create better advertising solutions for merchants as well as enable Alibaba to expand into the sale of new products and services.
“Our M&A activity is consistent with our core business strategy, which is consumption growth,” Tsai said. “It is not just about online shopping but also digital goods and services, so we are looking at [opportunities] that will enhance our position in the consumption economy and growth in the consumption economy.”