Alibaba Follows Amazon And Walmart, Pours $5.7B Into Holiday Sales Push
Alibaba Group Holding (NYSE:BABA) committed a minimum of 40 billion yuan ($5.7 billion) in resources to help merchants on Taobao and Tmall during the Singles' Day shopping festival.
Taobao and Tmall Group see 30 billion yuan in consumer vouchers and resources up to 10 billion yuan to boost traffic, SCMP reports.
The platforms also introduced new measures to reduce merchant operational costs, including waiving commission fees.
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The Singles' Day shopping festival was originally a 24-hour event named for its date, November 11th, or 11/11.
During Alibaba's 618 shopping festival in May and June, gross merchandise value (GMV) grew by 13.6%, but profit margins were hit, SCMP cites third-party data.
The margin hit probably reflects the intense domestic price war. Brands, including Apple Inc (NASDAQ:AAPL), Xiaomi Corp (OTC:XIACF) (OTC:XIACY), and Huawei Technologies Co, each exceeded 100 million yuan in gross merchandise value.
Earlier this week, Chinese stocks led by Alibaba got a boost from China's central bank's plans to cut banks' reserve requirement ratio (RRR) by 50 basis points or half a percentage point and trim the seven-day reverse repurchase rate to 1.5% from 1.7%.
China followed the U.S. Fed rate cut a week ago to spur growth by unlocking discretionary spending.
Recent reports indicated that Amazon.Com Inc (NASDAQ:AMZN) and Walmart Inc (NYSE:WMT) are boosting workers' hourly wages before the holiday season. In 2023, Amazon's U.S. sales reached $12.4 billion on Cyber Monday, up 9.6%, quashing the estimated $12 billion. The total online sales for Cyber Week reached $38 billion, topping the $37.2 billion estimate.
Alibaba stock has been up over 11% in the last 12 months as the critical rate cuts have offered respite from domestic economic weakness.
Price Action: BABA stock is trading higher by 7.24% at $102.34 premarket at the last check on Thursday.
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