Alibaba said that the Singles Day shopping festival had terrified 15% of China delivery sites
November 21, 2022: -China’s Covid controls disrupt Alibaba’s capability to deliver packages, the company said, which drags down the e-commerce giant’s sales in a competitive industry.
“The resurgence of Covid is affecting one area following another, which results in abnormal or suspended logistic service in other places,” Alibaba CEO Daniel Zhang said in a quarterly earnings call Thursday, according to FactSet.
He said that disruptions affected almost 15% of delivery places in China starting in October and from the 11.11 shopping festival campaign period.
This year, Alibaba refused for the initial time to share total gross merchandise value, an industry measure of sales over time, for its flagship Singles Day shopping festival that ended November 11.
The company said sales were “in line” with the previous year, which recorded the equivalent of $84.54 billion GMV.
Rival JD.com is not sharing GMV for its Singles Day promotional period this year, running from the evening of October 31 to the end of November 11. The company is due to release on Friday.
Douyin, China’s version of TikTok, has become a powerful platform for online shopping driven by live streamers. The video app claimed that from October 31 to November 11, daily average e-commerce sales increased by 156% from a year to an undisclosed figure.
China’s ongoing Covid controls are weighing on the overall economy. National retail sales decreased in October for the initial time since May; official data showed this week. Therefore, the share of physical goods sold online rose to over a quarter.
In the quarter that ended September 30, Alibaba’s Taobao and Tmall online shopping platforms experienced a GMV decrease by the low single-digits from before a year, CEO Zhang added.
While he noted logistics disruptions through November 11, he said the company was “seeing improvements.”
Last week, China trimmed quarantine times and signalled a broader easing in its stringent Covid controls despite an increase in infections across the country, which include the capital city of Beijing.
According to a model related to Nomura’s Chief China Economist Ting Lu, on Monday, 15.6% of China’s GDP was affected by Covid measures, up from 12.2% a year.
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