Despite a slowing Chinese economy, Alibaba surprised the world with higher-than-expected growth figures. According to the retailer, these are partly due to a restructuring that brings more entrepreneurship into the company.
As its revenue shot up 14 % to 234 billion yuan (29 billion euros) in the past quarter, Alibaba far exceeded analysts’ expectations. Adjusted EBITDA even went up 32 % to 45.37 billion yuan (5.7 billion euros) and operating profit even added 70 % to 42.5 billion yuan (5.3 billion euros).
According to the Chinese retailer, the growth was due to an increase in the number of customers and merchants’ ad investments on the platform, including during the 6.18 Shopping Festival. But the recent restructuring also appears to be paying off: splitting Alibaba into six separate business units gives managers the freedom to react more quickly to changes in the market. This gives the business new energy, CEO Daniel Zhang said.
Alibaba’s core businesses Taobao and Tmall managed to grow significantly in the slowing Chinese market. Thanks to strong content and competitive prices, those platforms are attracting new customers and average spending is also rising. The international retail business experienced strong growth of up to 60 %.