Declining orders on Lazada contributes to Alibaba missing quarterly revenue expectations

Chinese tech and ecommerce giant Alibaba recorded a small rise in its third-quarter revenue as consumers and merchants reduced their spending on the platform.

Alibaba posted a revenue growth of 3% to 207.18 billion yuan (US$28.96 billion), but saw its customer management revenue for its China retail business fell 7% annually.  

Customer management revenue tracks how much money merchants spend on Taobao and Tmall and usually accounts for 30% of the compamy’s total revenue. 

For its international commerce businesses, which includes Singapore-based Lazada, Alibaba said Lazada orders declined year-over-year during the quarter as Singapore reopened and consumers went back to retail stores. 

Despite the declining orders, Alibaba said revenue from international commerce business in the quarter was RMB10,738 million (US$1.5 million), an increase of 3% compared to RMB10,375m in the same quarter of 2021. 

“The ongoing resurgence of Covid-19, geopolitical tension, inflation, and currency depreciation—the convergence of all these forces has created considerable difficulties for business operations,” said Daniel Zhang , the chief executive officer at Alibaba. 

Last week, Alibaba stayed silent on Singles Day sales tally for the first time. The company said in the post-event press release that the event had “delivered results in line with last year's GMV performance despite macro challenges and Covid-related impact."  

In 2021, the company recorded the slowest increase in sales since the Singles Day event started in 2009.

The third quarter figures reveal that Alibaba spent considerably less this year on marketing expenses in the quarter ahead of the shopping festival.  Q3 sales and marketing costs declined from $4.05 billion, or 14% of quarterly revenue in 2021, to $3.14 billion, or 11% of quarterly revenue in 2022.

In terms of its overall bottom line, Alibaba posted a rare $2.9 billion net loss for the quarter, largely due to a decline in the value of its investments.