Alibaba.com recorded the slowest increase in profits over the past two years

  • 01/12/2011 AT 20:25 by It's a Gadget Staff
  • News

Alibaba logoThe largest e-commerce corporation in China, Alibaba.com, posted the slowest increase in profits for any quarter over the past two years. The blame was placed on the cooling trade prospects that are assumed to have resulted from the United States and European debt crisis.

Customer additions had a lower turnout due to the flabby macroeconomic environment. This in turn toppled the forecasts analysts had projected for the third quarter. A JP Morgan analyst, Dick Wei, admits that the company is shifting its focus to both quality suppliers and an increase in the complete product quality delivered to the consumer. They provide cutting edge services to assist the customer in identifying the quality of a product prior to shipping. There are no additional growth initiatives on the horizon for the company, which testifies that growth is not Alibaba’s chief concern at the moment. They are hoping revenue will kick in again in the next year or two.

Quality has become the centerpiece of a plan to overhaul a company beleaguered by serial protests and complaints from both suppliers and customers. Earlier in the year a spike in fake transactions forced the hand of management to restructure the company and establish supplier oversight. Alibaba.com is one of the most famous Internet commerce companies in China.

Alibaba.com was founded by Jack Ma, who is a billionaire, and 40% of the company is owned by Yahoo Inc. Its mission is to connect Chinese businesses with overseas buyers. Alibaba’s involvement in the international markets exposes it to vulnerabilities due to the fluctuations in the economies of major countries around the world.

The crisis in the U.S. economy and the E.U. debt problems deeply influenced the third quarter of 2011 for Alibaba.com. The global economy has made Alibaba.com more reserved in its optimism. China’s export sector might be impacted for a long time to come.

Domestic economic stumbling forced the factory sector to downsize, revealing another drastic braking of the Chinese economy. Alibaba’s net rose in July to September period to as much as 409 million yuan ($64 million). That is a steep climb over the previous year’s 366 million yuan. Revenue was up by 10.6%, international marketplace 11.8%, 1.6 billion yuan and 947million, respectively.

More than 55% of its complete revenue was attributed to the revenue gained from its China Gold Superior membership package. It had risen 11.5%, 918 million yuan. 30% of the China Gold Supplier revenue for the quarter was accounted for by value-added services. Although there was a drop of 1.3 and 24.8 percent in subscribers to China Gold Supplier and Gold Supplier packages, there was a 4.9% jump to over 787,000 paying members. Alibaba’s membership has suffered due to the company’s shift in focus to improving the quality of it existing membership, not to mention a rise in prices.

The company shares were higher by 2% prior to the publicity of the results. Total this year, the loss has amounted to 36%, which is worse than the Hang Seng Index loss of 22%.


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