Alibaba’s global perspective sends share price soaring

A combination of innovation, diversification and expansion into new territories has boosted Alibaba’s revenues and propelled its share price to new records with some analysts expecting it to break the $200 in the near future 

Alibaba’s (BABA) has earned widespread approval in the markets. Developing new ways to lure shoppers and diversification into new territories has pushed its share price to record highs. It’s at $192.12 ahead of their quarterly earnings report (November 2). 

The Chinese e-commerce giant’s shares have more than doubled in value this year (see chart). Much of Alibaba’s growth being fueled by the internet retailing boom in China. The move into cloud computing is currently loss-making. However, user numbers almost doubled to 1 million in a year and expansion into Malaysia and India should pay off. Also, Alibaba’s diversification into groceries, digital entertainment and financial services are showing potential for future growth. 

Alibaba’s goal is to reach 2 billion customers around the world within 20 years. In some cases, it has begun with digital payments, as in India. In others it has invested in e-commerce sites, as with Lazada, in South-East Asia. But it intends to build a broad range of services within each market, including payments, e-commerce and travel services, and then link local platforms with Alibaba’s in China.   

Alibaba’s recent success has, in part, been helped by Beijing’s severe restrictions on foreign internet companies. They’ve benefited from the boom in e-commerce while only contending with domestic competition. 

However, innovation has been at the core of Alibaba’s success. Sales events like its ‘11.11 Global Shopping Festival’ have been phenomenally successful. They have provide a platform for Alibaba to experiment with new forms of retail and customer engagement. These rely extensively on interactivity, technology and consumer analytics.

Biggest sales day of the year

The 11.11 event, which started at the beginning of November and culminates on the 11th of the month on their biggest sales day of the year, has promised even greater choice for shoppers and deeper levels of consumer engagement. Last year’s event generated more than $17.8 billion in gross merchandise volume. It’s bigger than similar US retail events like Black Friday and Cyber Monday. 

To launch the 11.11 season Alibaba subsidiary Tmall aired its “See Now, Buy Now” fashion show. It was billed as “retail as entertainment” and gave viewers the chance to buy what they saw. Brands like Victoria’s Secret, MAC and Guerlain could be shopped from the runway as they revealed their latest lines. 

If Alibaba’s results are better than analysts’ projections (they have been for the last four quarters) the earnings figures, combined with another successful 11.11 season could see the share price break through the $200 barrier. 

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