China’s Alibaba has seen a sharp increase in international sales, a sign that it is finally making strides outside its home turf.
Its latest results show international sales increased by 123% to 1.1bn yuan ($165m, £127m) between April and June.
However, that figure still made up just 4% of Alibaba’s overall revenue.
The e-commerce giant, founded the billionaire Jack Ma, is a well-known name throughout China but has struggled to break into markets like the US.
“They have a lot of room for growth in China, but they need to look at other markets and think about the 10 to 20 year growth,” said Hakon Helgesen, retail analyst at the consultancy Conlumino.
Tactics
The company, which is listed in the US, attributed a large portion of the increase in international sales to the purchase of Lazada – a Singapore based e-commerce firm. The deal was completed in mid-April.
Mr Helgesen said this represented a change in Alibaba’s strategy from trying to build a presence in established markets like the US – where the company is competing against big name players like Amazon – to focusing on more embryonic markets, particularly in Southeast Asia, where e-commerce sales are large but the market is still developing.
“I expect it will continue to do this through acquisition and this will be more of a change in tactic and a long term decision,” said Mr Helgesen.
Alibaba has expressed a clear desire to expand its presence internationally and plan for the next 10 to 20 years.
As growth in the Chinese economy flags, this expansion will be more important.
The company also reported the strongest earnings since it began selling shares on the stock exchange in 2014.
Revenue for the quarter rose to 32.2bn yuan from 20.3bn yuan last year.
Profit dropped by 77% from a year earlier to 7.1bn yuan, but last year’s figures were flattered by a big gain from the company separating out its film business.
Mobile growth
Alibaba also increased the number of sales by mobile users.
The number of Chinese users buying products on Alibaba through their mobile phones rose to 427 million from 410 million in the three months previous.
“We passed an important milestone this quarter in achieving higher monetization of mobile users than non-mobile users for the first time, reflecting the success of our strategy to stay ahead of the curve by embracing mobile,” said Maggie Wu, chief financial officer.
Mobile growth has been a key metric for investors who were concerned about whether the company could make this transition.
On a call with investors after the earnings were released, Alibaba did not address an investigation by the Securities and Exchange Commission (SEC) into its accounting practice.
The SEC is looking into the data reported from Alibaba’s Singles Day – its highly popular one-day shopping festival.
Alibaba is also facing a lawsuit from several international luxury brands accusing the company of not policing the sale of knock-off products on its site.
Source: BBC