Alibaba to Open Offline Second-Hand Store
Alibaba’s BABA online second-hand goods trading platform, Xianyu, is set to open its first offline “all-category” brick-and-mortar store in the Gongshu district of Hangzhou. The store, named Xianyu Recycle Shop, will use a consignment model, allowing customers to sell or buy used items.
The store is expected to offer a variety of goods, including shoes, apparel, accessories, and luxury items, providing a hassle-free experience for customers, eliminating the need to constantly check and respond to buyer inquiries via the app.
Alibaba is expected to gain solid traction across resellers in China on the back of its latest move.
Strategic Implications for Alibaba’s Market Presence
This move underscores Alibaba’s increasing efforts to strengthen its Taobao and Tmall Group segment’s offerings. The company aims to enhance customer experience by introducing new features and services, such as AI smart assistant “Taobao Ask Q” and the launch of Taobao PLUS, a new border services brand.
Furthermore, the Hangzhou Asian Games Official Flagship Store under Taobao and Tmall Group has expanded its product categories, including the introduction of nearly 400 Hangzhou Asian Games licensed products, leading to exponential growth in the segment.
Market Forecast and Concerns
The Zacks Consensus Estimate for BABA’s fiscal 2024 revenues is pegged at $132.68 billion, indicating year-over-year growth of 5.3%. The consensus mark for earnings is pegged at $8.86 per share, indicating year-over-year growth of 11.6%. However, weakening market conditions in China, softness in its China Commerce business, and sluggishness in online physical goods’ gross merchandise volume at Taobao and Tmall marketplaces continue to pose concerns for Alibaba.
The shares of Alibaba have lost 38% over the past year, underperforming the Zacks Retail-Wholesale sector’s return of 18.4%.
Final Thoughts
Alibaba’s strides to fortify the Taobao and Tmall Group segments are poised to contribute substantially to its overall financial performance in the near term. Despite the challenges, Alibaba’s innovative move in the second-hand market is expected to resonate with a wide array of customers, signaling a potential resurgence in the company’s market presence.
While Alibaba currently carries a Zacks Rank #5 (Strong Sell), it remains to be seen how its strategic initiatives will unfold amid the evolving market dynamics.
