From the last decade, Alibaba Group [NYSE: BABA] has been an undoubted e-commerce giant of China, however, now its position is quite sliding and it seems to be directionless with the emergence of various other competitors in the same domain.
At the beginning of this week, Alibaba disclosed that it was restructuring its e-commerce businesses into two divisions, one for China and another for the other foreign countries. Generally in China, it has two main marketplaces namely, Tmall, which is mostly for well-established brands and other one is Taobao, which mainly includes all kinds of merchandisers. These two marketplaces are used to process over more than $1 trillion by receiving and delivering orders annually.
However, in the last few months, Alibaba is experiencing a sharp downfall in the growth of its e-commerce segment in customer management revenue (CMR), which usually draws one-third or one-half of the total revenue from the demanding traders. While in the last quarter, that is in the period of July-September, it has seen a straight fall of 20% in its annual growth.
In the last month, Alibaba also cut up its yearly revenue forecast in sales and this year, its banner shopping events have only risen to 8.5%, which is a very small rise to date. These upsetting prices are majorly because of the slowdown of the global economy due to the outbreak of the Covid-19 pandemic and many regulatory changes which made merchants resistant to spend lavishly.
However, this downfall in the growth of Alibaba Group is also caused due to the onrush competition given by the rivals, which has snatched the position of Alibaba in the rapidly-growing e-commerce segments of China.
Furthermore, Douyin, which is a sister app to TikTok and relatively a newcomer in the market, is cited by the merchandisers and analysts to give live-surging importance in the e-commerce segment. At the same time, Pinduoduo Inc. [NASDAQ: PDD], which is listed by Nasdaq has stepped into the rural segment and budget section of e-commerce.
In addition, during an analyst call conducted last month, Huang Jinfeng, the CEO of Yatsen Holding, a Chinese cosmetics firm, said that “Presently, Douyin is holding a very important factor for the growth of the brands in the e-commerce sector.”
Moreover, the traders are fascinated with the amount of time spent by users on Douyin, which is found as approximately 1,871 minutes in October. According to Questmobile, which is a consulting firm, users spend around 350 minutes on Taobao which is less as compared to Douyin.