China’s economic slowdown has finally taken its toll on the country’s top eCommerce company — putting Amazon back on top as the most valuable eCommerce marketplace, Bloomberg reported.
While Amazon has a market value of more than $240 billion, Alibaba has dipped down to a value of about $180 billion. Alibaba had taken that top spot away from Amazon when it had its record-setting $25 billion IPO last fall, but it has since dipped more than 30 percent from its high point in November.
Alibaba’s earnings gave a bit of insight into the slowdown — caused in large part by the economic downturn that has China’s currency being devalued and consumers spending less. Missing expectations, Alibaba’s stock took a more than 4 percent hit during midday on Aug. 12 and got heavily criticized by major media outlets about its quarterly performance, which was its slowest growth in a three-year period.
For the past few quarters, Alibaba has been an eCommerce powerhouse — leaving investors more bullish on its strategy than Amazon’s “investment mode” that had it shelling out cash. But Amazon managed to surprise investors in its latest quarterly earnings by showing that it could, in fact, post a profit. Meanwhile, Alibaba has slowed its ambitions to grow into the U.S. marketplace and has tailored back growth.
“You can’t overlook the China slowdown,” RJ Hottovy, an analyst at Morningstar Inc., told Bloomberg. “Chinese consumer spending trends are in a slowdown.”
While Alibaba is focused on growing in China, expanding its logistics investments and working on its cross-border commerce strategies, Amazon has looked more toward India for possible growth. China still seems to be Alibaba’s turf — at least for now. And it appears Alibaba is staying put where they are most familiar.
“Familiarity creates a big advantage for Amazon,” Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University, said in an interview. “This is Wall Street saying, ‘If you think Alibaba is going to come into the U.S. and take on Amazon, think again.'”