The Chinese tech giant is dealing with scrutiny over the Ant Group and allegations by watchdogs of being a monopoly. Alibaba is building a “rectification plan” for its fintech affiliate Ant Group after it pulled its $37bn IPO last November following pressure from regulators.
In its latest quarterly earnings, Alibaba said there have been “significant changes in the fintech regulatory environment in China” after regulators halted the listing of Ant Group with questions over the business’s operations. The retrench was a major blow for the fintech business, which was due to list in both Shanghai and Hong Kong in what would have been a record public listing.
Ant Group, which runs Alipay, was originally founded as part of Alibaba Group. It was spun out in 2014 but Alibaba owns around one-third of the fintech business. Alibaba has attracted growing scrutiny in its home market from authorities. Competition watchdog, the State Administration of Market Regulation (SAMR), launched an investigation into Alibaba in late December over alleged anti-competitive practices.
The Chinese fintech titan Ant Group—co-founded by Alibaba billionaire Jack Ma—is set to go public in what could be one of the largest listings ever. WSJ explains how Ant’s backbone service, Alipay, has revolutionized payments and investing in the world’s most populous country. Photo Composite: Crystal Tai More from the Wall Street Journal: Visit WSJ.com: http://www.wsj.com Visit the WSJ Video Center: https://wsj.com/video On Facebook: https://www.facebook.com/pg/wsj/videos/ On Twitter: https://twitter.com/WSJ On Snapchat: https://on.wsj.com/2ratjSM
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“We have established a special taskforce with leaders from our relevant business units to conduct internal reviews,” the company said in its latest earnings report. “We will continue to actively communicate with the SAMR on compliance with regulatory requirements.
The regulatory hurdles haven’t dampened the company’s balance sheet though. It reported a 37pc increase in year-over-year revenues with fourth quarter earnings of RMB 221bn, about $33.9bn, and a net income of nearly $12bn.
Singles’ Day, a sales event on Alibaba and its competitor JD that is akin to Black Friday, boosted revenues for the company, reportedly seeing $74.1bn worth of orders sold through its platform during that period.
It has 779m active annual users in China as of December 2020, adding 22m users in the fourth quarter. The lion’s share of its business is in China but it marked gains in its international retail and wholesale business. The retail gain was attributed to Lazada, its e-commerce site active in south-east Asia, and Turkey’s Trendyol.
“The increase [in international wholesale] was primarily due to increases in both the number of paying members and average revenue from paying members on Alibaba.com, as well as an increase in revenue generated by cross-border related value-added services,” the company said.
Days after Jack Ma’s Alibaba was slapped with a staggering $2.8bn anti-monopoly fine, its fintech affiliate Ant Group has committed to a sweeping set of reforms in terms of how the company does business to appease Beijing. The central bank, the People’s Bank of China, said today (12 April) that the company – which is a spin-out of Alibaba – would restructure as a financial holding company.
It marks a sea change for China’s largest tech companies, which have been able to grow domestically with few restrictions, allowing China to develop several major businesses that are on par with some of the US giants. That heady growth hit a stumbling block in November, when Ant Group put the brakes on its IPO after pressure from authorities. At the time it was tipped to be the largest ever IPO, raising $37bn.
It is believed that Ant Group drew the ire of authorities after Ma made critical comments about financial regulators during a speech in October. With Ant Group restructuring as a financial holding company, it will be subject to much stricter regulatory controls and must hold higher levels of money in reserves – all moves that will ultimately affect its bottom line.
Minmetals said on Monday that it received a notice from the State Administration for Market Regulation in recent days about an investigation into the matter. In December 2015, subsidiaries of China Minmetals and Alibaba jointly announced their cooperation to build an e-commerce platform for steel. (Reporting by Sophie Yu and Tony Munroe, editing by Louise Heavens)
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Combine a pandemic that’s kept us cooped up indoors with an unusually cold winter and what do you get? A perfect recipe for some highly questionable online impulse purchases. Maybe you can’t stop hunting for a cocktail dress to wear at those summer weddings you may-or-may-not attend.
Or maybe you suddenly find your AmazonBasics kitchenware lacking in comparison to the celebrity chefs you’ve taken recipe inspiration from. Either way, if you feel like your online shopping has been more out of control than usual, you’re not alone: Consumer spending on e-commerce platforms shot up 44% over the past year, according to information from the U.S. Commerce Department.
Financial experts will tell you that if you want to curb unnecessary spending, you need to unsubscribe from marketing emails, block websites, and delete your credit card information from your browser. It’s sound advice that does the trick for many — but sometimes these tips can backfire or simply not go far enough. (Not to point any fingers, but this author may or may not have accidentally memorized her own credit card number from manually typing it in too many times.)
So if you’re a fellow member of the credit card memorization club who’s still spending more online than you’d like to, then you may need to replace easy hacks with more long-lasting habits rooted in behavioral psychology.
“I don’t think [easy hacks] are nearly as helpful as understanding why you’re doing it in the first place,” says Brad Klontz, a financial psychologist and certified financial planner. Here’s what to know about the psychology behind impulsive shopping and how to use that knowledge to create better habits.
Be conscious of your decision-making process
Most people would like to consider themselves rational beings, making decisions without letting their emotions get in the way. But behavioral economists have some harsh truth: that simply isn’t true. And when it comes to shopping, external players are actually encouraging you to act irrationally.
“Marketers are experts at triggering you emotionally to get you to spend your money,” Klontz says. In the digital age, where everywhere you click is seemingly a never-ending maze of email alerts and carousel ads, it can be downright impossible to avoid getting wound up, worrying you might miss out on a great deal.
“When we become emotionally charged, we become rationally challenged,” Klontz says. “Our prefrontal cortex becomes impaired.”
The prefrontal cortex is the area of your brain responsible for decision-making, and engaging it to get ahead of what triggers you to spend requires vigilance. Luckily, while the prevalence of online shopping can hinder peoples’ ability to think rationally, it also offers benefits that you can’t take advantage of in-store. Tricks like letting your cart sit for 24 hours or disabling alerts from stores can force us to reflect on whether or not it’s a good spending decision.
But managing your decision-making works best when you can individualize the experience. One way to do this is to take stock of what tends to be your go-to categories for impulsive spending and create specific parameters for what makes a purchase justifiable. For example, if shoes are your vice you might ask yourself: Can I wear them with X amount of outfits? Do I already have a similar pair that serve a similar function? Will they last for more than one season? And so on.
If you can honestly answer whatever questions you decide are important with qualifications that make spending the money worthwhile, then you’ll be less likely to cave when presented with the opportunity to make an impulsive purchase.
Train your brain to prioritize long-term gains…
What does buying a brand new KitchenAid mixer have to do with your ancestors foraging for berries to keep from starving? A lot, actually.
“So much of what we do around money and life relates back to what I call our ‘cave person’ brain,” Klontz says.
No, we don’t need to stockpile months’ worth of resources to protect our clan from outside threats, but the biological drive that motivates these survival behaviors appears to have a hand in the way people make shopping decisions.
Animals — including humans — have reward centers in their brains that respond to the “feel good” hormone dopamine when they acquire something they want or achieve a goal. Using that heightened sense of reward to your advantage by reorienting your priorities from buying something new to meeting more essential long-term financial goals could be the key to curbing unnecessary spending.
Klontz suggests those who find themselves overspending take stock of their overall financial health first and set goals from there: “Most people aren’t paying themselves first. That’s where the problem arises.”
Many financial advisors encourage people to follow the 50-30-20 breakdown: put 50% of your net income toward living expenses, 30% toward discretionary spending (aka fun money), and 20% into savings. If that last category isn’t up to par or you aren’t contributing a substantial amount to a retirement plan, Klontz says it should be your top priority before any unnecessary lifestyle upgrades.
But working to build a strong savings can still satisfy our natural inclinations to gather and protect — it just requires training. According to research from Santa Clara University, while a small portion of people have a genetic predisposition to save more due to a stronger link between their short-term and long-term thinking processes, the majority of us can get there by gradually rewiring our brain to prioritize long-term outcomes over short-term gains. The researchers found, for example, that when people were given tools to help them pre-commit to put more money in their savings accounts months in advance, they were more likely to accomplish the task and feel more positive about saving rather than spending.
Financial goal-setting apps that track your saving progress like YNAB, Mint or a good old-fashioned spreadsheet can help you start to change the way you think about saving from a chore-like must-do to a goal you can continually look forward to.
… And earn your present-day rewards
If your financial house is in order, you’re meeting that 20% savings threshold and you still have money leftover, then “frankly, I don’t care what you do with the rest,” Klontz says.
But if you want to avoid accumulating a bunch of junk you won’t actually use — even if you have the money for it — then connecting the goal of saving for a big purchase to meeting goals in your personal or work life can deliver a powerful dopamine response more satisfying than making daily “trips” to Amazon.
Here’s how it works: Say you want to buy a $250 memory foam mattress topper, an upgrade to your current set-up that will get plenty of use. At the same time, you have to give a major presentation at work in two weeks that requires extra attention each day to prepare for it. If you set aside $25 every day you work on the project, you can time an exciting purchase alongside the completion of the presentation. The delayed gratification and association between a higher level of effort with a higher reward can train you to prioritize long-term satisfaction over a short-term thrill.
Another option is to keep a list of spending ideas that come to you throughout the day — but don’t go browsing for them yet. When you browse or even let something sit in your cart for a few days, Klontz says you’re more likely to be blasted with advertisements and price change alerts specifically designed to trigger feelings of scarcity, which can influence people to make choices they usually wouldn’t.
Instead, jot down every potential purchase that comes up throughout the week and pick a dedicated day to comb through them to decide if you want to fork over the cash. Putting some distance between when the idea strikes you and when you actually hit ‘buy’ allows you the time to think through spending decisions and compare which items on your list will be most valuable to you.
If your finances are secure, there’s no need to deprive yourself of a fun splurge every now and then. It’s just about knowing how to keep yourself in check when faced with tempting offers.
With online shopping and the availability of shopping apps and more, it’s harder than ever to avoid impulse buying things you might not need. Here are some things I’ve learned that have helped me reduce impulse buying in my own life.
Over 30? Then you had better read on. Shein may not be a household name like e-commerce giants, Alibaba BABA-0.4%, Taobao, or JD.com, but as China’s newest retail Decacorn, its mystery-shrouded low profile is matched only by a single-minded ambition to become a global fast-fashion retailer.
Founded in 2008, Nanjing-based Shein is aimed squarely at Gen Z, luring young shoppers via Instagram and TikTok influencers and a barrage of discount codes for low-cost styles – with a dress costing just half that of a Zara equivalent, according to Societe Generale – uploading new products online in their hundreds every week.
Yet beyond its teen audience, ultra-publicity shy Shein remains largely unknown. But that anonymity could all be about to change after the Pearl River-based company became a surprise potential bidder for ailing U.K. fashion group Arcadia. While it failed in that attempt, the message is clear: Shein is ready to take on Main Street.
The story really starts at the beginning of 2012, when notoriously hard-working founder and CEO Chris Xu (sometimes known as Yangtian Xu) – an American-born graduate of Washington University – gave up his wedding dress business to acquire the domain Sheinside.com. Initially selling women’s clothing, in 2015 he renamed the company Shein, focused on overseas markets, and began snapping up fashion rivals.
The U.S is now Shein’s largest market, while it also ships to 220 countries, with websites for Europe, the Middle East, Australia, and the U.S. Rapid growth has been propelled by a series of funding rounds, most recently completion of Series E financing in 2020, which gave Shein an eye-watering valuation exceeding $15 billion. Revenues are not disclosed but are locally estimated in excess of $10 billion annually and have continued to soar throughout the pandemic, while it currently counts a number of Asian and international VCs and private equity houses among its backers. MORE FOR YOUFashion’s Nightmare Before Christmas As Debenhams Joins U.K. CarnageAs GameStop Army Goes Global, U.K. Retail And Malls Among Most ShortedDr Martens Puts Best Boot Forward With Year’s First Big IPO
Shein: Fast Fashion, Made Ultra Fast
Remember that age/awareness divide? Well, in the week starting September 27, Shein was apparently the most downloaded shopping app globally on iPhone, according to analytics platform App Annie. It ranked in the top 10 in the U.S., Brazil, Australia, the U.K., and Saudi Arabia.
To service the U.S. market, products are sent from Shein’s warehouse in Foshan, Guangdong province, to a warehouse near Los Angeles, Ca., and fulfillment can take over ten days, glacial by Amazon Prime’s AMZN+0.5% next-day delivery standards. But its affordability has ensured a loyal customer base, lured by an ever-changing roster of women’s clothing and accessories added at an average of 2,000 SKUs every day.
Shein is obsessed with identifying hot searches and trends in different countries to predict the colors, fabrics, and styles that will be popular, with an even faster cycle than Zara owner Inditex. It then promotes heavily with Instagram- and Weibo-friendly imagery, for accessible and attainable fashions across all its social platforms.
However, Shein’s ascent has not been without its problems. In July it was roundly condemned for having a swastika pendant available (an error for which it profusely apologized), while paid-for posts from celebrities and fashion influencers have elevated the brand’s image as well as slowly rebutting its low–cost, low–quality rap. The label even managed to sequester stars like Katy Perry, Lil Nas X, and Rita Ora for its May 2020 #SHEINTogether global streaming event.
The Emergence Of A Global Fashion Player
All this remember for a company that didn’t even have its own supply chain before 2014, preferring to buy directly from Guangzhou’s Shisanhang Garment Wholesale Market. However, faced with soaring demand, Xu created an in-house design team and within two years had assembled an 800-strong army dedicated to designs and prototyping for ultra-fast production. It also garnered a reputation for timely payment, something of a rarity in China, and as a result when Shein moved its supply chain operations center from Guangzhou to Panyu in 2015, almost all of the factories it worked with relocated.
In the same year, Shein entered the Middle East and sales soared, with revenues in 2016 rising to $617 million and exceeding $1.5 billion the year after.
Shein and the hundreds of factories that work with the company have coalesced in a production cluster bearing close similarities to A Coruña in north-east Spain, where Inditex’s headquarters are surrounded by its upstream and downstream suppliers. It has four R&D facilities in Nanjing, Shenzhen, Guangzhou, and Hangzhou, plus six logistics centers in Foshan, Nansha, Belgium, India, and on the East and West Coasts of the U.S. It also has seven customer service centers, based out of Los Angeles, Liege, Manila, Yiwu, and Nanjing, and employs more than 10,000 people.
Future plans are thought to include the development of new businesses in mobile payments, supply chain finance, advertising, and, of course, opening brick-and-mortar stores. Whatever happens, it’s likely to do it ultra-fast.
I am a global retail and real estate expert who looks behind the headlines to figure out what makes consumers tick. I work as editor-in-chief for MAPIC and editor for World Retail Congress, two of the biggest annual international retail business events. I also organise, speak at, and chair conferences all over the world, with a focus on how people are changing and what that means for the retail, food & beverage, and leisure industries. And it’s complicated! Forget the tired mantra that online killed the store and remember instead that retail has always been dog-eat-dog: star names rise and fall fast, and only retailers that embrace the madness will survive. Don’t think it’s not important, your pension funds own those malls!
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If there was a “stock of the century” award, Amazon (AMZN) would be the favorite. Since 2001, AMZN has rocketed above $3,300, turning every $1,000 into just shy of $600,000.Obviously, anyone who got into Amazon early and held on is living the high life and deserves a round of applause. But now, it’s time to come to terms with a sad truth: Amazon’s glory days are over.
Because it has finally met its match. And it’s all because of one simple reason: It finally has legitimate competition.
Below, I’ll show you the three companies—what I call the “anti-Amazon” alliance—all coming for Amazon’s throat. All are rapidly stealing key parts of Amazon’s business. And all will prove to be much better investments in the coming years… Recommended For You
And its new “secret weapon” Walmart+ could dethrone Amazon’s online dominance. Amazon launched its wildly popular Prime delivery service 15 years ago. Today there are more Prime subscribers than there are full-time workers in America!
Creating an “everyday goods” subscription with free delivery was genius. Why would members ever shop anywhere else when they can click a button and have practically anything show up on their doorstep in two days? In short, Prime transformed Amazon from an $18 billion internet retailer into a $1.5 trillion beast.
Walmart+ is a total game-changer. Walmart will sell over $75 billion-worth of goods through Walmart.com this year. In fact, it’s overtaken eBay to become America’s second-largest online seller.
The thing is, roughly 90% of sales still happen in-store. Walmart+ is going to transform Walmart into a true online behemoth.
The subscription will cost $98 a year, and include perks like unlimited same-day delivery, access to its new two-hour delivery offering, and discounts on fuel at Walmart gas stations. Clicking a button on Walmart.com and having groceries and other items show up on your doorstep the same day is huge.
Leading market research firm NPD Group tracks millions of online and in-store receipts. And its research shows 95% of US consumers shopped at a Walmart store last year. That’s roughly 225 million people.
I expect at least 10% of consumers will jump at the chance to sign up for Walmart+. And once these folks are “locked in,” they won’t want to shop anywhere else. In short, this will add hundreds of billions of dollars to Walmart’s value over the coming years. I believe the stock will double over the next 18 months.
An Army of Small Businesses Are Moving Online
Shopify (SHOP) is what I call the “anti-Amazon.” It helps entrepreneurs create and manage their own online stores.
Think of Shopify like an invisible partner that allows you to build your own brand. Regular RiskHedge readers know it now runs websites for over one million mom-and-pop shops.
There are 30 million small businesses in the US. These small businesses make up 99.9% of all companies in America. They are the beating heart of communities across the country. And according to IRS data, firms with less than $100,000 in annual sales raked in a combined $2.2 trillion last year.
Yet almost none of this happens online. A recent CNBC poll found almost half of small businesses don’t even have a website. And according to Gallup, two-thirds of mom-and-pop stores that sell online generate less than 10% of their sales on the internet.
But coronavirus lockdowns have sparked a once-in-a-lifetime shift. It forced tens of millions of businesses to close their doors for months. And the only way to keep cash coming in is to sell online.
In short, mom-and-pop shops moving online for the first time ever is the next great internet boom. And they’re choosing to sell through Shopify over Amazon. In 2012, it had just 42,000 merchants. Today, more than 1,000,000 businesses around the globe have set up an online store with Shopify.
This is the world’s most disruptive retailer that most investors aren’t paying attention to. It’s a stock to own for the next decade.
Here’s the Disruptor Amazon Can’t Compete With
Etsy (ETSY) is another member of the “anti-Amazon” alliance.
Etsy is an internet marketplace for artisans selling handcrafted, one-of-a-kind items. You’ll find everything from vintage jewelry… to solid wood picture frames… to custom wedding invitations on the website. It’s essentially a department store for craft goods.
In short, Etsy has become the “go-to” for artisans selling online. It currently has 65 million items you can’t find anywhere else. For example, my cousin recently bought my grandmother a family tree on Etsy. It was custom-made with all the grandkids’ names
And unlike buying stuff at big box stores, which is a chore, spending money on Etsy feels “good.” You can click on each item and read the story behind the person who made it. In short, it’s rewarding to know your dollars are going into the pockets of small businesses.
For example, my colleague just bought a $400 laundry rack on Etsy. He could have picked one up on Amazon for 50 bucks. When I asked why he bought one on Etsy he replied, “A woman in rural Maine handmade the rack. It feels good having it in my home.”
The Amazon machine simply can’t compete with this. In fact, becoming the “Amazon for artisans” is Etsy’s big opportunity. Roughly $5 billion worth of craft goods were sold through its marketplace last year. Yet the Association for Creative Industries shows folks in these markets spent $100 billion on handcrafted and unique products last year.
So Etsy has only realized 5% of its potential so far. It has years—even decades—of rapid growth left in the tank. As it helps millions of artisans sell their talents to the world, it’s sure to become an online titan. This is a stock that can double many times over in the coming years.
Amazon Won’t Dominate the Next 20 Years of E-Commerce
Amazon has been one of the most dominant, disruptive stocks over the past two decades. And it will continue to be a major force in online shopping. But its time as America’s undisrupted online king is drawing to a close.Disruptors like Walmart, Shopify, and Etsy are nipping at its heels. And I’m betting these three stocks will outperform Amazon over the coming years.
I’m a professional investor and the chief analyst at RiskHedge, a disruption research firm. My team and I hunt for under-the-radar “disruptive” companies that are changing the world and making investors rich in the process. Get my latest analysis at RiskHedge.com.
The data isn’t pretty. In 2016, the average cart abandonment rate was a whopping 77 percent. Then in 2017, it rose to 78 percent. Now, though the data’s not yet in for the entirety of 2020, for 2019, it was 79 percent.
As far as online shopping goes, every ecommerce store has a cart-abandonment problem. And some of those lost shoppers simply can’t be converted — they weren’t all that interested in the first place, and no matter what you say, they’re not going to finish their purchase.
But some of them can, which is why having an effective cart abandonment email is so important. More than 40 percent of cart abandonment emails are opened, 50 percent of those opened emails are clicked, and 50 percent of those who clicked ultimately purchased.
Still, how can you stop reasonable consumers — the ones who actually want to purchase — from bailing in the first place? Here are the top five reasons that people abandon their shopping cart. And fortunately, each one is pretty easy to fix on your end.
1. Unexpected Shipping Costs
According to 2017 research by Baymard Institute, the number one reason (by a long shot) that people abandon their shopping cart is because of unexpected fees, taxes or shipping costs.
If you’re a reasonable consumer yourself, then that isn’t all that surprising to hear. Imagine going through the checkout process on an ecommerce site for something you authentically want to buy and, when you’re just about finished, that product is more expensive than it said it was going to be. There’s no getting around it; that puts a bad taste in the shopper’s mouth. It makes them feel like they’re getting nickled-and-dimed, hoodwinked and bamboozled.
Fortunately, there’s an easy fix: Don’t wait to surprise people with shipping costs, taxes or other fees until the end of the checkout process. Just include all of those costs in the original price of the product. That way, when someone is about to click “Submit Order,” there’s no undelightful surprises that might derail their conversion.
The second most common reason that reasonable consumers abandon their shopping cart is that the site requires them to create an account. To understand why that is, you have to understand what is going through the consumer’s head at the time of conversion.
When they click “Checkout Now,” they want to purchase the product. The best thing you can do is get out of their way. Redirecting them to a page that says, “Create Your Account Now!” isn’t just abrasive, it’s also totally irrelevant to what they wanted to do (i.e. buy a product).
So ditch the mandatory account-creation (or add a “Check Out as a Guest” option), and just get their email address at the same time you get their shipping information. Most people won’t mind, so long as it feels like a natural part of the checkout process.
3. Poor User Experience
We now arrive at the third and perhaps the most irritating of reasons that consumers abandon their online shopping cart — namely, because the checkout process is too long, clunky or confusing. Shockingly, 28 percent of people abandon their shopping cart for this reason.
When someone wants to buy from you, let them buy from you. Make it as easy as possible. During the checkout process, don’t require them to enter unnecessary information, don’t add survey questions, and don’t complicate what should be a fairly simple transaction.
You can get more information from them later after they’ve finished their purchase. For now, make everything as smooth and seamless as possible.
If you’re dealing with technical difficulties (20 percent of people abandon their shopping carts because the website crashed), then do what you need to do to get the problems fixed, even if it costs some money. You’re losing money by not fixing a clunky checkout process, anyway.
4. Payment Security Concerns
Someone might love your product, they might love your site, and they might be ready to purchase right now. But if they don’t trust your site with their payment information, they’re not going to finish their purchase. Nineteen percent of people abandon their cart because they didn’t trust the site with their credit card information.
Even though you know your site is safe, it can help to offer some proof to the consumer during the checkout process. In fact, ConversionXL did some research on what kind of security badges help conversion the most and they found that PayPal, Norton, Google and BBB Accreditation badges are the most trusted by buyers.
Why not add one (or several) of those to the payment page of your checkout process and see how it impacts your conversion rate?
No ecommerce business likes to get returns. If returns just stopped being a thing one day, most entrepreneurs would probably be perfectly fine with that. Alas, no matter how you slice it, returns are a thing, and living in denial will do nothing but make your cart abandonment rate worse than it needs to be. Believe it or not, 11 percent of people leave a site before finishing their purchase because the return policy wasn’t good enough.
Is yours good enough? If you don’t offer at least the bare minimum for today’s online shopping world — a 30-day, money-back guarantee — then your policy is probably hurting your conversion rate. And what else are you doing business online for?
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