Alibaba flags new relationships for Singles' Day
- In a recent talk, Alibaba spoke of the importance of investing in its logistics network
- Singles' Day will be expanded to include offline retail, or 'omni-channel'
- Cloud computing continues to be an important part of its business
Consumption levels affected
Tsai said that the equity market downturn has affected consumption levels on Alibaba’s platforms, so average orders per customer will be a closely followed metric in the calendar third-quarter earnings.
The company has invested heavily in its logistics network and will continue to do so. In addition to the investment in its logistics subsidiary, Cainiao, there will be major developments in same-day grocery delivery, which I fully expect will be a major revenue driver over the next few years.
Singles' Day plans
Last year was the first time Western investors got a chance to experience Alibaba’s Singles' Day, albeit from the outside looking in. Singles' Day is a huge event in China, where all of the country's online retailers offer large discounts during a 24-hour time period on November 11 (11-11 looks like four single people).
This year, there will an increased focus on international brands. This will certainly be attractive to foreign firms as Chinese consumers typically delay their purchases until Singles' Day because they can save a significant amount of money.
Finally, the firm will expand Singles' Day to offline retail, with what they call an omni-channel. This means that if a user goes into an electronics store, they can experience a product, and then make a purchase online. This concept of combining the online and offline shopping experience is a major reason for the investment in electronics store Suning.
Barron’s article rebuttal
On Tuesday, I provided a counterargument to a Barron’s article that was published over the weekend and widely picked up by investors. During the conference, Tsai stated that the article was based on erroneous information that, if corrected, invalidates the arguments it was trying to put forward.
Expectations high for cloud computing
In the previous earnings release, cloud computing was given a separate line on the income statement, which indicates the company’s expectation of the potential size of the business. In terms of revenue, cloud computing generated $80 million for the firm in the second quarter alone, in an industry that is still relatively underdeveloped in China.
The real benefit to users will come from the ability to share data across difficult business lines. As Alibaba builds out its range of services, cloud computing allows businesses to effectively build a strong back-office data system. In China, most firms don’t have the physical back-office infrastructure in place that one would expect from a developed Western firm, so they are able to leapfrog the technological progress and go straight into cloud technology.