ICYMI: Alibaba saw its performance start to recover in April, which could point to a broader recovery in retail around the world in the next few months
spending in Alibaba's home market. This led its Tmall platform's online physical goods gross merchandise volume , excluding unpaid orders, to grow just 10% YoY in its most recent quarter — down from 24% YoY in the quarter before — as falling sales in categories like apparel and home furnishings offset gains in segments such as necessities and household goods.
But Alibaba does appear to have become more appealing to merchants and consumers during the pandemic, which could boost its sales in the future. Alibaba reported that it saw increasing adoption and engagement from merchants, likely because their abilities to sell in-store were restricted. The company that brick-and-mortar merchants are increasingly selling online, and sellers that already operate online are building out their e-commerce operations. These merchants may have flocked to Alibaba to boost their sales while their stores were unable to operate during lockdowns, bolstering Alibaba's product selection. And if these sellers find success on Alibaba's platform, they might focus more on e-commerce going forward, enabling Alibaba to bring in more volume in the years to come. The e-tailer also saw increased online grocery penetration with consumers, potentially mirroring the industry's reach in the US. Alibaba reported strong demand for food and groceries, with 60% of GMV at its omnichannel Freshippo grocery stores coming online, up from 50% in the comparable period a year ago. Consumers may be more interested in ordering groceries online during the pandemic so they can get products they need with limited exposure to other people and shared surfaces. But if they grow to like buying groceries online, they may continue to do so after the pandemic, increasing Alibaba's sales in the segment going forward. And Alibaba already saw its performance start to recover in April, which could point to a broader recovery in retail around the world in the next few months. The company reported a "strong recovery" for Tmall's online physical goods GMV in April, with it continuing to improve in May. So the combination of potentially recovering demand, a broader merchant base, and greater interest in online grocery could set Alibaba's commerce revenue growth to bounce back next quarter. Alibaba's possible recovery may be a bit ahead of other firms' since China's timeline with the pandemic is ahead of some other markets, but the recovery could suggest that merchants in other markets will see similar improvements in the not-too-distant future.Business Insider Intelligence analyzes the payments and commerce industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more. >>, Business Insider Intelligence's expert email newsletter keeping you up-to-date on the people, technologies, trends, and companies shaping the future of consumerism, delivered to your inbox 6x a week. >>
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