Alibaba bets on overseas e-commerce unit amid sluggish growth in China
The logo of the Alibaba office building is seen in the Huangpu District in Shanghai, June 16, 2023.
Costfoto | Nurphoto | Getty Images
Chinese tech giant Alibaba Group is betting on its overseas businesses while domestic consumption growth remains sluggish.
One bright spot in Alibaba’s latest earnings report was its international e-commerce business unit, which posted revenue of 28.5 billion Chinese yuan ($4 billion) in the December quarter, up 44% from a year ago. Alibaba International Digital Commerce Group includes platforms like AliExpress, Lazada, Daraz and Trendyol.
“The strong performance was driven by solid growth across all of AIDC’s retail platforms, especially from the crossborder AliExpress Choice business,” the company said.
Meanwhile, revenue from the company’s core e-commerce businesses Taobao and Tmall Group was $18.1 billion, growing only 2% year-over-year.
“We will step up investment to improve users’ core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year. We will also focus our resources on developing public cloud products and sustaining the strong growth momentum in international commerce business,” Eddie Wu, CEO of Alibaba Group, said earlier this month.
The tightening of the ship is likely designed to consolidate growth trajectories, de-risk uncertainties of operating in multiple, competitive markets …
Yinglan Tan
founding managing partner, Insignia Ventures Partners
Despite AIDC’s strong sales growth, losses also surged year-over-year mostly from “increased investment in businesses, including AliExpress’ Choice and Trendyol’s international business, partly offset by improvements in monetization.”
Subsidiary shakeup
The quarterly results follow a series of management shuffles at Alibaba and its subunits. Pakistan e-commerce platform Daraz replaced its CEO Bjarke Mikkelsen on Jan. 24. James Dong, CEO of Southeast Asian e-commerce giant Lazada Group, was named as Daraz’s acting CEO. The company said he would “work on a deeper integration between Daraz and our sister companies.”
In early January, Lazada executed a mass layoff across Southeast Asia, which affected employees of all levels including senior management. The cuts hit all departments including commercial, retail and marketing.
People at Alibaba International familiar with the matter told CNBC that the Lazada layoffs were intended to “streamline decision-making and boost organizational and business efficiency.”
“These latest management shake-ups have their roots in the Alibaba split last year, largely a strategy to navigate the regulatory developments in China which have long put pressure on the tech giant,” said Yinglan Tan, founding managing partner at Insignia Ventures Partners.
“AIDC’s nature as a portfolio of diverse and individually complex businesses ranging from Daraz to Lazada also plays a key factor. The tightening of the ship is likely designed to consolidate growth trajectories, de-risk uncertainties of operating in multiple, competitive markets …,” said Tan.
Leadership changes
In March, Alibaba had said it would split itself into six business units and pave the way for individual stock listings. Zhang told investors the move would allow Alibaba’s business “to become more agile, enhance their business decision-making, and respond faster to market changes.”
“Keeping their organisations agile and adaptable is always at the top of the agenda of Chinese tech leaders. This has been made even more urgent with the rise of competitors and changes in the external environment,” said Momentum Works in a January report titled “Understanding Alibaba’s most radical changes in history.”
Mirroring its parent company’s moves, Lazada’s leadership team has also seen its fair share of changes in recent years.
Dong took over as Lazada Group CEO from Chun Li in June 2022, after running the company’s Thailand and Vietnam operations. Prior to that, Dong was head of globalization strategy and corporate development at Alibaba Group and a one-time business assistant to former CEO Zhang.
In 2020, Li took over the role from Pierre Poignant, who succeeded Lucy Peng in December 2018, who was just nine months into the job.
Intense competition
The e-commerce business that once propelled Alibaba to success has run into challenges with upstart competitors such as PDD, while consumption growth in China remains sluggish.
China-based PDD Holdings reported third-quarter revenue nearly doubled, far outpacing Alibaba‘s 9% growth during the same period. PDD said revenue in the quarter was $9.44 billion, up 94% from $4.99 billion in the same quarter of 2022. Alibaba posted 9% year-on-year revenue growth in the third quarter to about $31 billion.
Alibaba’s Hong Kong-listed shares have plunged from an all-time high of 309.4 Hong Kong dollars ($39.59) on Oct. 28, 2020, according to LSEG data. Shares closed at HK$71.50 on Monday.
Thomas Fuller | Lightrocket | Getty Images
Reddit shares popped about 5% after the social media company debuted new artificial intelligence-powered advertising tools.
The two new features, announced Monday in a post during the Cannes Lions festival, will help brands better leverage discussions on the platform. The company said the tools are powered by an engine called Reddit Community Intelligence that turns “posts and comments into structured intelligence.”
Reddit announced a “listening tool” called Reddit Insights, which shares real-time insights with marketers to help them identify trends and launch campaigns. The other tool, called Conversation Summary Add-ons, allows brands to show “positive” user content under their ads.
“These are tools for a new era of community marketing, one where brands can tap into Reddit’s authenticity and connect meaningfully with high-intent communities around the world,” the company wrote.
The company said Publicis served as the exclusive alpha tester for Reddit Insights, while Lucid and Jackbox Games were among the early testers for Conversation Summary Add-Ons.
Companies across industries are betting on new ways to harness AI to improve advertising campaigns and better engage with users. These new tools are transforming the industry while also putting pressure on some advertising stalwarts.
The industry is also currently navigating a bumpy environment spurred by the trade war with China.
During the recent earnings season, many companies warned of sluggish advertising sales in certain regions due to a rocky macroeconomic environment. Recent developments, however, have suggested a cooling of tensions between the U.S. and China.
Last month, Reddit posted strong sales and upbeat guidance. The company has benefited from recent changes to Google search and internal site improvements, which include convincing logged-out users to open accounts. Logged-in accounts are more beneficial to advertisers.
WATCH: Outgoing WPP CEO says AI will ‘revolutionize’ advertising business
Helsing uses AI to analyze large amounts of sensor and weapons system data from the battlefield.
Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images
European defense technology startup Helsing on Tuesday said that it’s raised 600 million euros ($693.6 million) in a bumper new round of funding.
The investment was led by Prima Materia, the venture capital firm founded by Spotify CEO Daniel Ek and by Shakil Khan, an early investor in the popular music streaming app. Ek is also chairman of Helsing.
Existing investors Lightspeed Venture Partners, Accel, Plural, General Catalyst and Saab also put money in, alongside new investors BDT & MSD Partners.
Defense and the technology behind it have become a hot area for investors lately, amid major global conflicts, including the Ukraine war to Israel-Gaza. Last week saw a further escalation of war in the Middle East as Israel launched a series of airstrikes against Iran.
In 2024, venture funding in Europe’s defense, security and resilience sector reached an all-time high of $5.2 billion, according to a recent report from the NATO Innovation Fund. The sector grew 30% in the past two years, outperforming the broader VC market, which saw a 45% decline over the same period.
Founded in 2021, Helsing sells software that uses artificial intelligence technology to analyze large amounts of sensor and weapons system data from the battlefield to inform military decisions in real time. Last year, the startup also began manufacturing its own line of military drones, called HX-2.
Helsing, which operates in the U.K., Germany and France, said it would use the fresh cash to invest in Europe’s “technological sovereignty” — which refers to attempts to onshore the development and production of critical technologies, such as AI.
“As Europe rapidly strengthens its defence capabilities in response to evolving geopolitical challenges, there is an urgent need for investments in advanced technologies that ensure its strategic autonomy and security readiness,” Ek said in a statement out Tuesday.
Helsing did not disclose its new valuation following the latest financing round, which is subject to “certain approvals,” according to a statement. The firm was previously valued at around 5 billion euros in a 450 million euro funding round led by General Catalyst last year.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike