Alibaba, the e-commerce giant, faced disappointment in the June quarter of 2024 as it missed both top and bottom-line expectations. The company reported a revenue of 243.24 billion Chinese yuan, falling short of the 249.05 billion yuan expected. Similarly, the net income of 24.27 billion yuan was below the anticipated 26.91 billion yuan. This resulted in a 4% increase in revenue year-on-year, while net income dropped by 29% annually. Alibaba attributed the decline in net income to a decrease in income from operations and an increase in impairment from its investments.
Alibaba has been struggling in its core e-commerce business due to rising competition and a cautious Chinese consumer. The company has been facing tough competition from rivals such as JD.com and PDD, owned by Temu. The cautious consumer sentiment in China has also added to Alibaba’s challenges in achieving growth. The e-commerce giant has been trying to navigate through this difficult period by implementing changes in its corporate structure and management.
Eddie Wu took over as the chief executive of Alibaba in September, following a series of high-profile management changes. Since assuming leadership, Wu has been focused on getting Alibaba’s core China e-commerce business back on track. The company is undergoing a transition phase where it plans to put more emphasis on third-party merchants selling through its platforms, such as Taobao and Tmall in China. This strategic shift aims to reduce reliance on direct sales business and drive growth through new monetization features.
In the June quarter, sales from the Taobao and Tmall group, representing Alibaba’s China e-commerce business, declined by 1% year-on-year to 113.37 billion yuan. On the other hand, Alibaba’s overseas online shopping businesses, including Lazada and Aliexpress, showed a positive performance with a 32% increase in sales in the international e-commerce division. This indicates a mixed performance across different business segments for Alibaba in the recent quarter.
Alibaba faces a series of challenges in the e-commerce sector, including tough competition, a cautious consumer market, and internal restructuring. The company’s strategic shift towards third-party merchants and overseas markets highlights its efforts to drive growth and overcome the obstacles it currently faces. It remains to be seen how Alibaba will navigate through these challenges and return to a path of sustainable growth in the coming quarters.