Alibaba Group’s ecommerce business’ profit increase contributed to a fantastic quarter for the Chinese ecommerce giant. They reported a near doubling of net income to just over $2bn in its first financial quarter. This has significantly beaten analyst expectations as the boom in Chinese online shopping shows little sign of slowing down in the future.
Alibaba’s revenues rose 56% to over $7 billion in the three months to the end of June which has seen the company easily outperform its optimistic guidance released in June that predicted sales to rise by up to 49%. Shares in Alibaba have performed strongly over the last 12 months and this has seen them rise more than 70%, taking its market capitalization to above $400 billion.
A Return To More Normalised Revenues
The leap in revenues for Alibaba that has seen them surpass all industry commentators predictions is attributable to a number of factors. A number of technological advances that have improved customer personalisation has perhaps seen the biggest impact. However, the initial impact will diminish somewhat so revenue growth should return to a more normalised level it is thought in the coming months.
Other factors that could see a return to more normalised growth is the fact that Alibaba has come under more and more pressure about the amount of fake goods that are sold on its websites, and the company remains under investigations by the United States’ Securities and Exchange Commission over its accounting practices. It has also found itself being warned by the Chinese government over its carrying of illicit content, substances and tools that help users get around the nation’s internet content filters, specifically the sale of the recently banned VPN tokens.
The Future Is Bright For Alibaba
However, the figures overall suggest a strong future for Alibaba and their strong growth looks set to aid their founders mission that the company will overtake Amazon by 2019. According to Simon Hu of Aliyun, Alibaba’s cloud computing arm, whilst Amazon may be ahead at the moment, but this is not necessarily such a disadvantage for Alibaba.
“Amazon, Microsoft and others have already laid the groundwork for us by educating the markets about cloud in the U.S. and Europe, so we have an even better opportunity to join in the competition.”
Daniel Zhang, the CEO of the Alibaba Group was bullish about the recent financial reports.
“Alibaba had a strong start to fiscal 2018, reflecting the strength and diversity of our businesses and the value we bring to customers on our platforms. Our technology is driving significant growth across our business and strengthening our position beyond core commerce. We are excited about the future as we continue to innovate and drive synergies among the businesses throughout the Alibaba ecosystem.”