Alibaba: Another Shopping Festival

| About: Alibaba Group (BABA)


Alibaba is setting up another shopping festival centered around Chinese New Year.

Positive implications on the potential for cross-border e-commerce and pickup in rural e-commerce.

Bullish on BABA's near-term growth outlook.

Alibaba (NYSE:BABA) had a strong Singles' Day last year where it showcased its superior e-commerce platform, scale and global logistics capability. With the Chinese New Year approaching in less than a month, BABA is announcing a new Ali Chinese New Year Shopping Festival to drive another wave of e-commerce purchase before the holiday. For the readers in North America, the lunar New Year would be a combination of Christmas and Thanksgiving all in one week. Needless to say, it is a big deal, and BABA is certainly going to capitalize on this opportunity.

I remain bullish on BABA. Keep in mind that near-term growth in domestic e-commerce will remain steady while the medium-term and long-term outlook will be driven by cross-border e-commerce and the integration of the strategic assets in the BABA ecosystem.

As of January 14, the initial phase of the shopping is already underway with sales kicking off on January 17, spanning a period of five days. Most of the sales will be centered around the larger cities where consumers will be able to purchase high-quality foods from 25 countries such as American crawfish, Alaska black cod, Russian king crab, Canadian lobster, Australian beefsteak, Chateau Lafitte from French vineyards and British tea. However, it is worth highlighting that BABA is also putting greater emphasis on China's rural community that is most likely to shop on e-commerce given the weak retail infrastructure in those regions. Most notably, BABA will arrange more than 500 overseas brands on rural Taobao to bring global products to rural farmers. This will help the global brands to raise their awareness in China, setting the stage for future consumer penetration.

Cross-border e-commerce will be a theme in this shopping festival with Tmall Global giving consumers in northern China a chance to get a better understanding of the cross-border goods available on BABA's e-commerce platform. I ultimately think these trade shows allow the Chinese consumers to be comfortable with the foreign brands and could potentially be accretive to cross-border e-commerce in the future. In addition, Tmall Global will work with major brands such as Macy's (NYSE:M), Sears (NASDAQ:SHLD), Target (NYSE:TGT), Costco (NASDAQ:COST), Sainsbury (OTCQX:JSAIY), Metro and King Power to provide premium goods from their countries. I note that Chinese consumers are fairly keen on brands from these retailers such as Costco's Kirkland brand that are very popular in China, and this is supportive of BABA's long-term estimates on cross-border sales.

Conclusion: Singles' Day sales was a success for BABA, and I think the company could start another trend for Chinese New Year. Remain bullish on the stock.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.