Alibaba slashes 2022 outlook as competition intensifies

An Alibaba office in Beijing, China. Picture: REUTERS/THOMAS PETER

On Thursday, executives fielded a barrage of questions from analysts concerned about the longer-term picture for growth and Alibaba’s efforts to fend off rivals. The lacklustre numbers underscored the former stock market darling’s struggle to revive businesses walloped by macroeconomic and regulatory turmoil. Alibaba’s stock fell 10% in New York.

Revenue growth at a plethora of divisions including its Cainiao logistics arm and local on-demand services underperformed expectations, while bread-and-butter customer management revenue from platforms such as Taobao and Tmall grew just 3% — the slowest in at least five quarters. Pinduoduo this year surpassed Alibaba as the largest Chinese e-commerce platform by annual active shoppers, reaching 849.9-million users in the 12 months to June. Meanwhile, JD.com has been attracting new and returning brands like Starbucks and Estee Lauder to its platforms, taking advantage of Beijing’s edict to end exclusivity arrangements previously imposed on merchants.

The slowdown at Alibaba looked set to extend into a December quarter that included Singles’ Day, the year’s biggest shopping festival. Alibaba last week reported sales of $84.5bn during the blockbuster event, reaching yet another record. But the 8.5% increase was a stark slowdown from previous years, as the company eschewed high-profile promotions to focus on sustainability and philanthropy — key pillars of President Xi Jinping’s drive to achieve “common prosperity”.

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