Alibaba said at an event on Monday that they have reached 3 trillion yuan in transaction value, but the company is gearing up for a bumpy ride, as growth slowed from previous years.
The company is hoping to reach 6 trillion yuan in gross merchandise value (GMV) per year by 2020, said CEO Daniel Zhang. However doubling the companyโs GMV could prove tough in the economically challenging environment of modern China.
Alibabaโs yearly growth in GMV was 23%, down from 46% recorded in 2015. The figure, which represents the complete value of all goods traded on Alibaba platforms, is an indicator of consumer confidence, as well as Alibabaโs overall economic health.
While its expected that a platform the size of Alibaba will see lower growth as it enters maturity, thereโs little doubt that market saturation and economic turmoil contributed to the companyโs milder retail expansion.
2015 also saw smartphone sales in China reach a saturation point, leading to a sharp downturn in growth for mobile vendors. Sales on Alibabaโs platforms are very much tied to the expansion of mobile internet in China.
Alibaba executives have been open about the challenges facing the companyโs growth in 2016. During Alibabaโs 2015 Singles Day sales event Chairman and Alibaba founder Jack Ma noted that 2016 would be a challenging year for the company.
โGrowth is meaningless unless it is sustainable,โ said Alibaba executive vice chairman Joe Tsai in a blog post on Monday. โThus, we have turned our focus to quality growth and broadening domestic consumption.โ
Alibabaโs focus on domestic consumption in 2016 involves reaching out to Chinaโs untapped small cities and rural populations. In Mr. Tsaiโs blog post he noted that the company had reached 12,000 of the the countryโs 600,000 villages, with an aim to expand strongly. Alibaba also recently reached a partnership with the China Communist Youth League, deploying a million teenagers in rural areas to start e-commerce businesses.
The 3 trillion milestone is triple the GMV of 2012, meaning that if the company is aiming for 6 trillion by 2020 the companyโs commerce platforms will see a much milder growth rate in the coming years.
