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Alibaba sees sales lower than expected
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CHINESE e-commerce giant Alibaba Group Holding Ltd has said it expected its total value of transactions in the quarter ending in September to be lower than previously thought, a fresh signal that China’s slowdown is taking a bite out of consumer spending.
Alibaba is not the first company to flag the negative impact on sales of a weakening Chinese economy, but its sheer size makes it a bellwether. The company dominates e-commerce in China, where online spending is expected to hit US$1 trillion by 2019, according to a report by research firm Forrester earlier this year.
At a tech conference in New York on Tuesday, Alibaba’s head of investor relations, Jane Penner, said consumers were still willing and able to spend but the company had been seeing a “negative impact of the magnitude of the spending.”
Alibaba now expects GMV, or gross merchandise volume, to be “mid-single digits lower” than its initial estimates in the quarter. GMV is the total value of transactions made on Alibaba’s platforms and is one of the most closely watched metrics for e-commerce companies.
“We are still seeing actually high engagement by buyers on our platforms ... but lower average order values, for example,” Penner told Citi’s Global Tech Conference, according to an online playback of the comments.
In August, Alibaba reported GMV growth of 34 percent in the three months through June to 673 billion yuan (US$106 billion), the slowest growth in more than three years.
Alibaba also said it expected growth in its AliExpress business to slow to low double-digits for the quarter through September, due to weakening currencies in markets such as Russia and Brazil.
The AliExpress business is a global online marketplace for shoppers to buy directly from China.
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