Alibaba Vs. JD.com: Who’s Winning The Chinese E-Commerce Battle?
What’s Behind Alibaba’s Performance? Alibaba’s dismal performance is partly attributable to the intensifying rivalry in the Chinese e-commerce market, as the players battle for dwindling consumer spending amid a softer macroeconomic environment.
Alibaba’s China retail marketplace year-over-year revenue growth slowed from 14% in the June quarter to 3% in the September quarter. Physical goods gross merchandise volume growth rose by single digits, dragged by a slowdown in apparel and general merchandise sales.
Alibaba blamed the slowdown on weaker demand, continued merchandise subsidies and increased competition.
The saving graces, however, were strong growth in newer areas including Taobao deals, International, Cloud and local services.
The e-commerce weakness is likely to linger on, as is evident from the guidance reduction announced by Alibaba.
Citing slower e-commerce growth, the company lowered its revenue growth guidance for the fiscal-year ending March 2022 from 30% to a range of 20-23%.
Revenues climbed 25.5% year-over-year to $33.9 billion and non-GAAP net income per ADS came in at 49 cents. Annual active customer accounts rose 25% year-over-year to 441.6 million in the 12 months ended Sept. 30.
In comparison, Alibaba’s revenue growth slowed from 34% in the June quarter to 29.5% in the September quarter to reach $31.15 billion, and non-GAAP net income per share fell 38% year-over-year to $1.74.
Annual global active consumers of the Alibaba ecosystem were at 1.24 billion for the 12 months ended Sept. 30, 2021.
JD.com’s outperformance was due to the company’s competitive advantages in supply chain and logistics, Mizuho Securities analyst James Lee said.
Among categories, Electronics & Home Appliances revenues grew 19%, a point ahead of consensus despite facing supply shortage as the company capitalized on its first-party supply chain to secure inventory, Lee said. General Merchandise revenues grew 29%, beating consensus by two points, he added.
Lee said he expects revenue growth accelerating moderately to 26% in the fourth quarter, given JD.com had a good start on Singles’ Day promotion. The company’s retail margin will likely to expand year-over-year in the fourth quarter, reflecting improved efficiency, the analyst added.
Barclays analyst Jiong Shao said JD.com is leveraging logistics infrastructure, hard built over the years.
Alibaba, JD.com Price Action: Alibaba’s shares are sharply lower from their all-time high of $319.32 reached on Oct. 27, 2020.
The September quarter earnings report triggered a further slide in the stock, dragging it deeper into the red for the year-to-date period. The year-to-date loss now stands at about 38.3%.
In comparison, JD.com shares are up about 0.2% year-to-date. The relative outperformance of the stock has come despite the company operating with the same shortcomings as Alibaba that include the weak retail spending and regulatory hiccups.
Notwithstanding the near-term issues with Alibaba, sell-side is persisting with its bullish stance on the company cofounded by Jack Ma. Analysts, however, have tempered their near-term expectations.
Alibaba shares were slipping an incremental 2.19% to $140.44 midday Friday, while JD.com shares were adding 4.2% to $91.80.
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