China’s two largest ecommerces reported better than expected sales

China’s two largest ecommerce sites Alibaba and Pinduoduo reported better than expected sales growth despite coronavirus difficulties in the first quarter. Both online marketplaces struggled with shortages of merchants and couriers as the virus lockdown trapped millions of Chinese at home in rural areas, far from the cities where they run online shops and ferry packages. Hangzhou-based Alibaba increased revenues 22 per cent to Rmb114.3 billion ($16.1 billion) but sales stagnated at its core Tmall and Taobao ecommerce marketplaces. Sales of clothing, accessories and home furnishings fell during the three-month period, as did some of its offerings for restaurants and shops… Alibaba, China’s reigning ecommerce giant with 726 million annual shoppers, faces rising competition from upstart Pinduoduo, with 628 million, and resurgent JD.com with 387 million. Three years ago, Shanghai-based Pinduoduo had fewer than 100 million customers. But Chinese shoppers have flocked to Pinduoduo for subsidised deals, happy to let investors shoulder some of the price tag of items such as iPhones and AirPods. The company spent Rmb7.3 billion on sales and marketing fees, which include the subsidies, during the first quarter, or more than the Rmb6.5 billion it recorded in revenue. Its sales were up 44 per cent from a year earlier. 

Ryan McMorrow

Food4Brains

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