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Alibaba to Attract Overseas Merchants Via English Portal

Zacks Equity Research

Alibaba Group Holding Limited's BABA robust efforts toward enhancing product offerings continue to aid its dominance in the Chinese e-commerce space.

The company's latest strategy is to set up a new English-language portal on cross border e-commerce platform,Tmall Global. It also expects to set up other foreign-language versions of the website, namely Spanish, Japanese and Korean, in the near future.

This initiative is in sync with its strategies that are focused on bolstering the inflow of more merchants and businesses from around the world into China’s largest cross-border online shopping platform.

The deal will expand product options on Alibaba's Tmall platform, which in turn will help it cater to growing consumer demand. Alibaba expects this initiative to help it double the number of foreign brands on Tmall Global to 40,000 in the coming three years.

Consequently, this will drive the company's top line.

More on the Headlines

The new initiative gives overseas merchants a chance to join the Tmall platform by filling in details online about their products. On verifying the category and quality of products, the merchants will be contacted within a time span of 72 hours. On the contrast, earlier sellers could only join Tmall through personal introduction, trade fairs or Chinese-language website.

The new portal definitely makes it easier for overseas merchants to enter the Tmall platform for selling goods. It also allows smaller businesses to introduce their brands to Chinese customers more quickly.

We believe that the latest initiative is likely to accelerate the company's plans of bringing international goods worth $200 billion to China over the next five years.

Alibaba Group Holding Limited Price and Consensus

 

Alibaba Group Holding Limited Price and Consensus

Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote

Strong E-Commerce Market to Aid Growth

The online retail market of China is witnessing a boom on account of increasing penetration of Internet and mobile use.

Per a report from Forrester, the country's online retail market is anticipated to reach $1.8 trillion by 2022. Further, sales in this market are expected to witness a CAGR of 8.5% between 2018 and 2022.

eMarketer's report suggests that China is anticipated to contribute 56% to global online retail sales in 2019 and the figure is expected to cross 63% by 2022.

Consequently, Alibaba, with its expanding portfolio of new brands and robust retail strategies, is likely to gain further traction in this potential Chinese market.

However, the latest move is expected to provide a tough competition to the companyfrom the likes of Amazon and JD.com, which are also leaving no stone unturned to strengthen e-commerce market share in China.

Nevertheless, Alibaba's well-performing Tmall Global, known as the biggest cross-border platform in China, is offering more than 20,000 overseas brands under 4,000 product categories from 77 countries. This is likely to help the company to continue its dominance in China.

Zacks Rank & Key Picks

Currently, Alibaba carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Autohome Inc. ATHM, Match Group, Inc. MTCH and Marchex, Inc. MCHX, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Autohome, Match Group and Marchex is currently projected at 20.9%, 15.2% and 15%, respectively.

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