The Chinese company is using a new strategy that involves the use of investments to boost profits.
The financial results from Alibaba’s first publicly traded quarter have now been announced and, along with those drooping figures, the company has also revealed its new strategy to inject some life back into its profits by backing investments into mobile marketing and m-commerce.
From July through September, Alibaba saw its net income drop by a dramatic 39 percent.
This occurred despite the fact that the company saw a massive surge of 54 percent in the company’s revenues, based on a powerful user demand. The results that were recently released showed that the company is using a strategy that is not entirely unlike one of its rivals, Amazon, the American e-commerce giant. This strategy involves using investments into mobile marketing, m-commerce, and other areas within itself in order to be able to boost its own growth over the long term.
In October, Amazon.com Inc. had reported experiencing a considerable third quarter loss and is also investing in mobile marketing.
This was the case, even though it had also seen a growth in revenue by 20 percent. It has been pouring its money into itself, hoping to build itself up in order to achieve greater profits over the long term. In this, it has been looking to advertise over smartphones, tablets, and even streaming television, as it promotes and encourages its m-commerce side.
That said, outside of that specific part of the strategy, the two companies have a very different way of operating. Amazon directly sells and distributes products and also works with third party sellers. Alibaba, on the other hand, is not in competition with merchants, nor does it carry any inventory.
Investments into mobile marketing and commerce are set to become an important opportunity for earning potential by the company that is continuing its rapid growth at the same time that all of this is happening around it and within it. It will be very interesting to watch the direction that the company takes throughout the current quarter, which is considered to be a critical one within the American marketplace.
The most common purpose for shopping over smartphones and tablets will be to locate stores.
At a time in which there are scores of holiday shopping forecasts are starting to be released, the consensus appears to be that mobile commerce is going to be one of the most critical components of this vital season, despite the fact that a growing number of consumers will be headed to actual stores in order to make their purchases.
This implies that m-commerce and in-store shopping will complement one another, this year.
This means that it is important for brick and mortar shops to focus on mobile commerce not as its competition, but as a complement to its own ability to make a sale. Smartphones and tablets are set to play a very important role in the complete process of both shopping and decision making. Consumers will use their devices regardless of the fact that they will still go to stores in order to buy what they want.
For this reason, mobile commerce isn’t necessarily an independent shopping channel but one that works with others.
That said, while shoppers are looking to their mobile devices to learn more about the products that they are considering, to compare prices, and to find the places that sell the item, they still often prefer the experience of going to the store and seeing the items in person before they buy them. They also like the opportunity to have the item that they have purchased in their hands, instead of having to wait for it to be delivered.
According to the 2014 holiday shopping study conducted by Deloitte, which included the participation of 5,000 American consumers, the average holiday spending this year will be $1,299, which represents an increase of 13 percent over last year. Among all U.S. consumers 72 percent will be using their smartphones for shopping purposes, though this does not mean online purchases, exclusively. The report on the mobile commerce survey showed that the devices would also be used for the following purposes:
• 58 percent – to find a store location
• 52 percent – to obtain and compare prices
• 48 percent – for browsing products online
• 47 percent – to obtain information about a product
• 44 percent – to read product reviews
• 41 percent – to check the availability of a product
• 41 percent – to obtain sale information, discounts, offers, and coupons
• 36 percent – to use social networks to discuss products
• 35 percent – to purchase a product or service online
• 32 percent – to receive text message based deals from retailers
• 31 percent – to scan barcodes such as QR codes to learn more about a product.
