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 share price has more than doubled in value this year. 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, diversifying into groceries, digital entertainment and financial services shows 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, making 11.11 bigger than Black Friday and Cyber Monday in the US.
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. Viewers could shop brands like Victoria’s Secret, MAC and Guerlain directly from the runway as they revealed their latest lines.
If Alibaba’s results are better than analysts’ projections, as 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.