Coronavirus to hurt Alibaba’s first half revenue growth

With merchants and logistics companies staying away due to the epidemic outbreak, the e-commerce giant expects a slowdown in revenue growth.

Alibaba said it expects slower revenue growth in the first quarter due to the impact of the novel coronavirus but also pointed to the long-term shift toward digital services, which would be beneficial as consumers change their spending behavior.

The e-commerce giant reported 56 percent surge in profit to 46.5 billion yuan (US.7 billion) in the three months ended December last year with strong spending at its annual Singles Day shopping event in November.

Revenue climbed 36 percent to US3.2 billion.

The novel coronavirus outbreak has restricted the ability of merchants and logistics companies to resume business as usual, Alibaba pointed out.

However, it expects a rebound in consumer sentiment and strong desire for spending after being kept away from shopping and offline activities.

“We’ve seen increase in online users in the lower-tier cities or the less-developed regions of China to purchase daily necessities which in the long-term would be a favorable trend,” Executive Chairman and Chief Executive Officer Daniel Zhang said.

A series of measures have been offered to ensure the supply of medical equipment and daily necessities and bring relief to merchants.

It has waived overseas vendors service charges to expedite the introduction of new brands on its overseas platforms Tmall Global and Kaola.

“This is an inevitable trend (after the epidemic outbreak) that more and more businesses and customers will have a digital life or digital working style,” he added.

The e-commerce company has expanded to cover lifestyle services and digital entertainment and had 711 million active consumers by December, an increase of 18 million from just three months ago as it extended to lower-tier cities.

Alibaba Cloud revenue surged 62 percent from a year ago in the quarter.