Asia-Pacific region leads the e-commerce share of retail transactions
It seems that Chinese users have become more tech-savvy than their Western counterparts in the United States and the United Kingdom when it comes to conducting e-commerce transactions. According to a report from eMarketer, China (FXI) leads the e-commerce share of retail transactions worldwide at 15.9%.
This lead has ensured that the Asia-Pacific region leads this market, with more than 10% of retail transactions happening digitally.
Comparatively, as the chart above shows, Western Europe and North America are second and third at 7.3% and 7%, respectively
Unlike other companies, Alibaba does not house its own inventory but instead acts as a platform for other retailers to reach BABA's immense customer base. This business model has proven to lead to absolutely enormous earnings margins. Further, BABA recently announced that it will be launching a sort of Netflix / HBO competitive product inside China.
If this fraud claim is simply wrong, then Alibaba is a remarkable investment opportunity with a stock price hammered by systematic risk (the Chinese market) and what could be totally unsubstantiated fraud accusations.
But, if Alibaba is a fraud at any meaningful level, the stock still holds a $150 billion market cap, so the fall from here could still be abruptly lower. The stock is down 50% from its highs and could easily drop another 50% from here, if not more.
If I'd like to focus on one area, Mark or Trevor, could you guys address -- in China, the results were outstanding. There has just been a lot of headline news around the Chinese consumer, China economy, the currency pieces. I was wondering if you could just elaborate a little bit in terms of the puts and takes that you are seeing in the Business from a financial perspective and really how you are seeing such great demand with the futures and the current quarter revenues?
Trevor Edwards - President, NIKE Brand
The piece that we continue to look at is the brand in China is extremely strong. And that's a piece that we have known for a while. As we went through the reset strategy, we wanted to be really focused on how to make sure that we could drive the Business.
So, we're very mindful of the macroeconomic volatility in the marketplace. But we continue to really focus on the things that we can control which is how we continue to bring excitement to the marketplace and also continue to align the marketplace around our category offense and we're seeing success from that perspective.
So, we saw growth in really all key categories from sportswear, to running, to basketball; we saw it in our wholesale and also in DTC. In DTC, our business actually grew 46% in DTC. And in our wholesale partner’s accounts, the stores that have been re-profiled, those doors actually continue to outperform the actual entire fleet, increasing both productivity and profitability. So, we feel very, very good about the business and we stay really focused on delivering, as I said, great product into the marketplace and really driving the category offense.
Now turning to China, where revenue grew an impressive 30% for the quarter, on both a reported and currency-neutral basis. While we’re very mindful of the macroeconomic volatility in China, our brand has never been stronger and our marketplace has never been more healthy. We have momentum across nearly all key categories, as well as continued strength in our DTC business. EBIT for China grew 51% in Q1, due to very strong revenue growth, gross margin expansion and SG&A leverage
but the shanghai index is still up 35% from the beginning of the year.
China Service sector is growing at 10%.
Footwear 599 440 36 % 36 %
Apparel 246 202 22 % 22 %
Equipment 41 37 11 % 11 %
Total 886 679 30 % 30 %