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Ant Financial, an Alibaba subsidiary and the operator of AliPay, is acquiring a UK based money transfer company WorldFirst for more than £500m (US$640m).

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Alibaba Group Holding Limited announced its financial results for the quarter ended 31st December 2018.

Growth driven by technology

The company had another strong quarter. In the press release, Daniel Zhang, CEO of Alibaba, commented that “Our resilient operating and financial performance is a direct reflection of our persistent focus on better serving our growing base of nearly 700 million consumers across retail, digital entertainment and local consumer services. Our growth is also driven by the power of Alibaba’s cloud and data technology that helps expedite the digital transformation of millions of enterprises.

Highlights of the group’s third-quarter performance are summarised below.

Strong top line figures

  • Turnover for the three months reached RMB117.3bn (US$17.1bn), up by +41YoY
  • Core commerce (Taobao & Tmall) revenue grew +40% YoY to RMB102.8bn (US$15.0bn), with 28% YoY growth for customer management revenue
  • Digital media and entertainment revenue up by +20%YoY, reaching RMB6.5bn (US$944mn)
  • Cloud computing revenue up by +84%YoY to RMB6.6bn (US$962mn), driven by increased spending from enterprise customers

Growing consumer engagement

  • Annual active consumers reached 636 million, up 35 million over the prior quarter, driven by successful user acquisition program such as referrals through the Alipay app. Notably over 70% of annual active consumer growth was from third and lower tier cities
  • Mobile monthly active users (MAUs) increased by 33 million from the previous quarter, reaching 699 million

Other business highlights

  • Consumption growth remains strong:
    • Tmall physical goods paid gross merchandise value (GMV) up by + 29%YoY, exceeding forecast by China’s National Bureau of Statistics
    • The growth was driven by fast-moving consumer goods (FMCG), apparel and home furnishing categories
  • New retail redefines the future of physical stores:
    • Freshippo (formerly Hema) now has 109 stores, with strong same-store growth
    • Around 470 Sun Art stores enabled with New Retail technology
  • Logistics keep driving engagement:
    • Ele.me (on-demand food delivery platform) and Koubei (online restaurant and local service guide) are combined to provide better service and better value for local customers
    • Cainiao processed over 1 billion delivery orders during 11.11
  • Encouraging Lazada performance
    • Alibaba’s Southeast Asia ecommerce platform Lazada also showed good growth in GMV. The upgraded Lazada’s technology resulted in increased number of active users and better engagement of Lazada’s mobile app

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The high end membership-only retail club chain is to open 40 more stores in mainland China by end of 2019.

High confidence in the market

Since the first Sam’s Club opened in Shenzhen in 1996, the company now has 19 stores covering different geographic regions of China: Beijing, Shanghai, Shenzhen, Guangzhou, Fuzhou, Dalian, Hangzhou, Suzhou, Wuhan, Changzhou, Zhuhai, Tianjin, Xiamen, Nanjing and Changsha.

The company plans to open new stores to complement current stores. Currently there is only one Sam’s Club in Shanghai, which was opened eight years ago in Pudong. A second one will shortly be launched in Shanghai’s Qinpu area. Meanwhile, the retailer is also negotiating for five more locations in Shanghai.

Continuous investment is the best way to prove our confidence in the Chinese market", president of Sam's Club China, Andrew Miles, commented.

Sam's Club China
Source: IGD Research

Going from strength to strength

Sam’s Club has a strong performance in China. Its revenue is up by +8%YoY in 2018.

It has 2 million members in mainland China. It opened online store with direct delivery service in 2010. Same-day-delivery service for chilled and frozen food was launched in 2012 in main cities. In 2014, Sam’s Club App was launched after forming a strategic partnership with Tencent, opening the gateway of reaching WeChat’s one billion monthly active users. Recently, it started testing one-hour delivery service in Shenzhen.

Because of these progressive initiatives on service and user experience, Sam’s Club saw a 300% online growth since 2016. It is estimated that online sales will account for 13 – 15% of total revenue by end of this year when the 40 more stores are opened.

Membership of Sam’s Club China costs US$36 per annum, raised from US$23 in 2016. Premium memberships available at US$100 per year. An average Sam’s Club provides at least 1,500 parking spaces for its members, with a shopping area of 20,000 square meters.

 

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The ecommerce giant is launching a new technology that enables the blind and sight-impaired shop online.

“Smart Touch” technology

Smart Touch is a piece of silicone film that sticks to smartphone screens. The film has three textured touchscreen buttons that users can feel along the edges of the screen for commands such as “go back,”, “return to homepage” and “confirm”. The commands can be tailored, depending on the app. For example, when paired with Taobao app, the touchscreen buttons can represent “My Shopping Cart”, “Tmall Golbal” and “Tmall Supermarket”.

Smart Touch is a joint effort between Damo Academy, Alibaba’s $15bn global research program, and China’s Tsinghua University.

Source: Alibaba

Enabling digital accessibility

Smart Touch was not the first accessibility technology that Alibaba introduced. Last year, Taobao (Alibaba’s online marketplace) added Optical Character Recognition (OCR)  technology to its pages, enabling Taobao’s 300,000 daily active users who are blind to “read” texts on images.  

Images are becoming ever more important in the shopping experience,” said Wang Yongpan, the algorithm specialist that led the OCR upgrade. “A typical product page on the site contains about 40 images, and most product specifications and descriptions are often found within images, rather than typed out in plain text.”

Making the platform more user-friendly is high on by Taobao’s agenda. “If I had to do one thing this year, that would be to make Taobao simpler and bring [us] back to our original purpose,” President Jiang FanJiang said.

Taobao is making good progress in improving online shopping experience for the visually impaired. Its data shows that it takes less than a minute for a shopper who is blind to complete the shopping journey online, from searching the product to making the payment.  

 

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The retailer completed Indonesia’s first government approved drone flight, a breakthrough for drone delivery in Southeast Asia.

Providing access to rural areas

The test flight took place on 8th January 2019, in West Java, Indonesia. It is a joint project between JD.com, the World Economic Forum (WEF) and the Indonesian government. The news of JD.com’s breakthrough was announced at the WEF’s annual meeting.

The drone delivered backpacks and books to MIS Nurul Falah Leles Elementary School in Jagabita Village, Parung Panjang, Indonesia.

Villages like Jagabita are typically difficult to reach using conventional on-the-ground transportations because of the treacherous road conditions. Drone technology provides an effective and efficient means to reach these villages for the first time.


Source: JD.com

Having a profound impact

JD.com has been using drones for deliveries in rural areas of China for over two years. “We have seen the profound impact that the technology can have on people’s lives around the country,” said Jon Liao, Chief Strategy Officer at JD.com.

Indonesia has 17,000 islands, where drone technology has potential to make a much bigger impact.

This trial represents the first government approved drone delivery operation in Indonesian history,” said Timothy Reuter, Head of Drones and Tomorrow’s Airspace at the WEF. “These tests are an opportunity for Indonesia to become a leader in the Southeast Asia region by leveraging drone delivery to improve access to vital medical, humanitarian, and commercial goods in remote areas.”

JD.com and WEF will work together on drone projects in Indonesia and Southeast Asia.

This test flight is only the beginning.

 

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This in-depth guide to China explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

Five year growth forecasts for the grocery market, the leading retailers and modern trade grocery channels in China.

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