Alibaba Group Holding (BABA) is setting its sights on a successful Singles’ Day campaign in Hong Kong, with ambitions for double-digit sales growth. The e-commerce giant is pulling out all the stops, including a new promotion designed to attract shoppers in the city. Starting on October 1st, Alibaba launched a 1 billion yuan ($142 million) initiative to waive delivery fees for specific Taobao orders over 99 yuan. This move comes at a pivotal time, coinciding with China’s recent fiscal stimulus announcements aimed at boosting the economy.
Taobao, Alibaba’s flagship online shopping platform in mainland China, has already witnessed a significant year-on-year surge in both gross merchandise value (GMV) and order volume in Hong Kong, according to the South China Morning Post. David Ye Jianqiu, general manager of Tmall Taobao World, reported overwhelmingly positive feedback from users regarding the free shipping initiative. He expressed strong confidence that Taobao will achieve double-digit year-on-year GMV growth during this year’s Singles’ Day event in Hong Kong.
Alibaba’s strategic shift towards expanding beyond its mainland China market is evident in these efforts. The company faces intense competition in the domestic market, prompting a price war. Taobao and Tmall have remained committed to various initiatives to enhance value and solidify their position. Earlier this September, Alibaba unveiled plans to introduce a 0.6% software service fee on confirmed transactions for vendors utilizing its Tmall and Taobao platforms. This move aims to significantly boost Alibaba’s core merchant revenue.
Analysts at Jefferies Financial Group highlighted that Alibaba currently generates the majority of its Taobao and Tmall revenue from customer management fees, which merchants pay for advertising and customizing their product offerings. Furthermore, Taobao and Tmall Group (TTG) have established a new “digital technology” company with a registered capital of 10 million yuan ($1.4 million). This company is focused on importing and exporting goods, specializing in food, daily groceries, outdoor products, and household appliances. It also offers technology services such as software development and tech transfer.
While Alibaba’s fiscal first-quarter topline grew by 4% to $33.47 billion, falling short of the consensus estimate of $34.81 billion, Taobao and Tmall Group revenue declined by 1% to $15.60 billion. Despite this, BABA stock is showing positive momentum, rising by 2.18% to $102.26 at the last check on Friday. As Alibaba focuses on international expansion and innovative strategies, its performance in Hong Kong’s Singles’ Day campaign will be a key indicator of its future growth prospects.
