• Alibaba Group focuses on international ventures amid slow domestic growth, with its international e-commerce arm, including AliExpress and Lazada, showing strong revenue growth.
  • Despite this, losses surged due to increased investments, while management shake-ups reflect strategic adjustments amid regulatory challenges and market competition.
  • Alibaba faces stiff competition from emerging rivals like PDD and regional players like Shopee, while its partnership with Tokopedia signals intensified competition in Southeast Asia.

Alibaba Group, a major Chinese tech firm, is focusing on its international ventures amid slow growth in domestic consumption.

In Alibaba’s recent financial report, a standout was its international e-commerce arm, generating 28.5 billion Chinese yuan ($4 billion) revenue in the December quarter, marking a 44% increase from the previous year. This unit, known as Alibaba International Digital Commerce Group (AIDC), comprises platforms like AliExpress, Lazada, Daraz, and Trendyol.

The company attributed the robust performance to significant growth across all AIDC retail platforms, particularly the cross-border AliExpress Choice business.

However, revenue from Alibaba’s core e-commerce entities, Taobao and Tmall Group, reached $18.1 billion, reflecting only a 2% year-on-year growth.

Alibaba Group CEO Eddie Wu emphasised plans to enhance user experiences on Taobao and Tmall Group and to bolster market leadership, alongside developing public cloud products and sustaining growth in international commerce.

Despite AIDC’s strong revenue growth, losses increased year-over-year, primarily due to heightened investment in businesses such as AliExpress’ Choice and Trendyol’s international operations, partially offset by improved monetisation efforts.

Also read: JD wins antimonopoly lawsuit against Alibaba, rewards consumers with $140 million

There is a series of management changes

The quarterly results follow a series of management changes within Alibaba and its subsidiaries. For instance, Pakistan’s e-commerce platform Daraz replaced its CEO Bjarke Mikkelsen on January 24, with James Dong, CEO of Southeast Asia’s e-commerce giant Lazada Group, assuming the role of acting CEO for Daraz, aiming to deepen integration among sister companies.

In early January, Lazada executed widespread layoffs across Southeast Asia, affecting employees at all levels, including senior management, across various departments like commercial, retail, and marketing.

According to sources at Alibaba International, the layoffs at Lazada were intended to streamline decision-making and enhance organizational efficiency.

These recent management shake-ups are largely attributed to Alibaba’s restructuring last year, primarily aimed at navigating evolving regulatory landscapes in China, which have long posed challenges for the tech giant.

Furthermore, AIDC’s diverse portfolio, spanning from Daraz to Lazada, contributes to the strategic adjustments aimed at consolidating growth trajectories and mitigating uncertainties associated with operating in multiple competitive markets.

Competition becomes more and more intense

While Alibaba’s e-commerce division faces challenges from emerging competitors like PDD, domestic consumption growth in China remains sluggish.

During the third quarter, China-based PDD Holdings reported a nearly doubled revenue, surpassing Alibaba’s 9% growth for the same period. Alibaba’s Hong Kong-listed shares have declined since reaching an all-time high in 2020.

Similarly, Alibaba’s Southeast Asia unit Lazada faces tough regional competition from rivals such as Sea Limited’s Shopee and ByteDance’s TikTok Shop.

In December, TikTok partnered with Tokopedia, the e-commerce arm of Indonesia’s GoTo, injecting $1.5 billion into an expanded Tokopedia entity. GoTo resulted from a merger between Gojek and Tokopedia, signalling intensified competition in the region.