China slapped a record $2.8 billion fine on Alibaba Group Holding Ltd. after an anti-monopoly probe found it abused its market dominance, as Beijing clamps down on its internet giants.
The 18.2 billion yuan penalty is triple the previous high of almost $1 billion that U.S. chipmaker Qualcomm Inc. had to pay in 2015, and was based on 4% of Alibaba’s 2019 domestic revenue, according to China’s antitrust watchdog. The company will also have to initiate “comprehensive rectifications,” from protecting merchants and customers to strengthening internal controls, the agency said in a statement on Saturday.
The fine — about 12% of Alibaba’s fiscal 2020 net income — helps remove some of the uncertainty that’s hung over China’s second-largest corporation. But Beijing remains intent on reining in its internet and fintech giants and is said to be scrutinizing other parts of billionaire founder Jack Ma’s empire, including Ant Group Co.’s consumer-lending businesses and Alibaba’s extensive media holdings.
Alibaba used its platform rules and technical methods like data and algorithms “to maintain and strengthen its own market power and obtain improper competitive advantage,” the State Administration for Market Regulation concluded in its investigation. The company will likely have to change a raft of practices, like merchant exclusivity, which critics say helped it become China’s largest e-commerce operation.
“The high fine puts the regulator in the media spotlight and sends a strong signal to the tech sector that such types of exclusionary conduct will no longer be tolerated,” said Angela Zhang, author of “Chinese Antitrust Exceptionalism” and director of Centre for Chinese Law at the University of Hong Kong. “It’s a stone that kills two birds.”
Alibaba’s practice of imposing a “pick one from two” choice on merchants “shuts out and restricts competition“ in the domestic online retail market, according to the statement.
The government action sends a clear warning to the tech sector as the government scrutinizes the influence that companies like Alibaba and social media giant Tencent Holdings Ltd. wield over spheres from consumer data to mergers and acquisitions.
The investigation into Alibaba was one of the opening salvos in a campaign seemingly designed to curb the power of China’s internet leaders and their billionaire founders. The company has come under mounting pressure from authorities since Ma spoke out against China’s regulatory approach to the finance sector in October. Those comments set in motion an unprecedented regulatory offensive, including scuttling Ant Group Co.’s $35 billion initial public offering.
Alibaba said it will hold a conference call Monday morning Hong Kong time to address lingering questions around the antitrust watchdog’s decree.
“China’s record fine on Alibaba may lift the regulatory overhang that has weighed on the company since the start of an anti-monopoly probe in late December,” Bloomberg Intelligence analysts Vey-Sern Ling and Tiffany Tam said, describing the fine as a small price to pay to do away with that uncertainty.”
Still, it remains unclear whether the watchdog or other agencies might demand further action. Regulators are said for instance to be concerned about Alibaba’s ability to sway public discourse and want the company to sell some of its media assets, including the South China Morning Post, Hong Kong’s leading English-language newspaper.
The Hangzhou-based firm will be required to implement “comprehensive rectifications,” including strengthening internal controls, upholding fair competition, and protecting businesses on its platform and consumers’ rights, the regulator said. It will need to submit reports on self-regulation to the authority for three consecutive years.
“Alibaba accepts the penalty with sincerity and will ensure its compliance with determination. To serve its responsibility to society, Alibaba will operate in accordance with the law with utmost diligence, continue to strengthen its compliance systems and build on growth through innovation,” the company said in a statement on Saturday.
Chief Executive Officer Daniel Zhang said in a memo to employees on Saturday that Alibaba always reflected and adapted when it faced challenges. He called for unity among staff, saying the company should “make self-adjustments and start over again.”
The Communist Party-run People’s Daily newspaper said in a commentary on Saturday that the punishment involves specific anti-monopoly measures regulatory authorities take to “prevent the disorderly expansion of capital.”
“It doesn’t mean denying the significant role of platform economy in overall economic and social development, and doesn’t signal a shift of attitude in terms of the country’s support to the platform economy,” the newspaper said. “Regulations are for better development, and ‘reining in’ is also a kind of love.”
Ekeh, Zinox boss, To Headline Konga SME CONNECT Conference
Thousands of expected participants, including representatives of large corporate organizations, players in the SME segment of the Nigerian economy and other business owners are expected to learn useful tips for creating new wealth at a virtual conference to be hosted by Konga, Nigeria’s leading composite e-Commerce giant.
The event, tagged Konga SME CONNECT with the theme – Making New Money, is scheduled to hold on Thursday, May 20, 2021, at 10 am
Africa’s leading digital entrepreneur and Chairman, Zinox Group, Leo Stan Ekeh, has been confirmed as the keynote speaker at the event. Ekeh, who is expected to speak for 20 minutes, will deliver useful and incisive business success tips to participants, including existing and prospective merchants on the Konga platform. Also expected to participate in the conference are budding entrepreneurs and unemployed youths in search of opportunities to partner with Konga.
Ekeh will speak on the theme – ‘‘Making New Money’’.
To confirm participation, interested participants are expected to register for the event via the link.
Speaking on the event, VP Online Mr. Kenny Oriola, Konga Group, affirmed that the Konga SME Connect is a unique opportunity for participants to learn from Ekeh, arguably Africa’s most successful digital disruptor, while also affording them a chance to appraise themselves of the many avenues of partnering with Konga and creating sustainable wealth.
‘‘It is no secret that the raging COVID-19 pandemic has altered the equation of commercial transactions not only in Nigeria but across the world, with SMEs and even large corporate organisations battling hard to keep their heads above water.
‘‘The prevailing situation requires business owners, entrepreneurs and even job seekers to remain alive to new and emerging opportunities in this challenging business space. In times of difficulties such as these, opportunities abound to create wealth and only those with the vision to sniff out these opportunities will benefit. This is one of the many tips we will be sharing with new, existing and prospective merchants on the Konga platform, as well as business owners, the unemployed and other participants. Indeed, the Konga SME CONNECT is a must-attend event for all.
‘‘We are delighted to have Mr. Ekeh as the keynote speaker. We see him as a fitting testimony to the possibility of building the biggest business in Africa with astute vision, hard work, integrity and most importantly without taking any loans. We expect all participants to draw useful insights from the rich experiences Mr. Ekeh will share on the day,’’ he concluded.
The Konga SME CONNECT which will hold virtually is expected to become a regular feature for partners of the trusted e-commerce giant.
Jumia’s Gross Merchandise Value Drops 13 Percent in Q1 2021 Despite Lockdown
Jumia, Africa’s leading online marketplace, recorded a 13 percent decline in Gross Merchandise Value (GMV) from €189.6 million in the first quarter (Q1) of 2020 to €165.0 million in the first quarter of 2021.
This was despite Amazon, Alibaba and other global e-commerce companies posting high GMV due to the surge in online orders because of ongoing movement restrictions in most nations.
Annual Active Consumers rose by 6.9 percent to 6.9 million in the quarter under review, up from 6.4 million in the same quarter of 2020, the leading e-commerce stated in its financial statements.
Orders grew by 3 percent year on year to 6.6 million from 6.4 million posted in the corresponding quarter of 2021.
Gross profit expanded by 10.9 percent from €18.4 million in Q1 2020 to €20.4 million in Q1 2021. While gross profit after fulfillment expense rose by 149.5 percent to €6.2 million, up from €2.5 million achieved in Q1 2021.
Sales and advertising expense moderated to €8.1 million in the quarter under review, representing a decline of 9.1 percent from €8.9 million posted in Q1 2020.
Technology and content expense stood at €6.9 million in Q1 2021, below €7.2 million in Q1 2020. G&A expense, excluding SBC improved from €24.4 million decline posted in Q1 2020 to €20.3 million decline in Q1 2021.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) also improved by 24.2 percent to a €27 million decline in Q1 2021 from €35.6 million.
Similarly, operating loss improved by 23 percent from €43.7 million posted in Q1 2020 to €33.7 million in Q1 2021.
Commenting on the company’s performance Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia, said “Our first quarter results reflect solid progress towards profitability. The drivers remain consistent: selective and disciplined usage growth, gradual monetization and continued cost discipline. The first quarter of 2021 was the sixth consecutive quarter of positive gross profit after fulfillment expense, which reached €6.2 million, more than doubling year-over-year, while Adjusted EBITDA loss contracted by 24% year-over-year, reaching €27.0 million”.
“Our strategy to increase our exposure to everyday product categories continues to yield positive results, enhancing the relevance of our marketplace for consumers. We are making further inroads in payment and fintech with 37% of Orders in the first quarter of 2021 completed using JumiaPay. Last but not least, we have raised over $570 million over the past six months, strengthening our balance sheet and increasing our strategic flexibility.
“We are confident we have all the right ingredients to continue to build a growing business across both our e-commerce and fintech activities.”
Amazon Makes $300k Revenue Per Employee, But eBay Makes 3x More
The latest report from HelpCenter team has shown that among the three e-commerce rivals – Amazon, Alibaba, and eBay – the latter is the most efficiently productive. With $811,024 revenue per employee, eBay’s workforce efficiency exceeds its competitors nearly 3 times, leaving Amazon with $297,381 and Alibaba with $285,540 revenue per employee behind.
The results were calculated based on official data from the selected e-commerce companies. Amazon earned a staggering $386 billion last year with an army of 1.298,000 employees, followed by Alibaba’s $71.98 billion generated by 252,084 workers, and
eBay’s $10.30 billion (12,700 employees).
Better employee engagement leads to higher work efficiency
Managing existing human resources, onboarding high numbers of new employees, and keeping them all engaged have not been easy for e-commerce giants as well, and that might have affected each company’s revenue per employee as a result.
Although Amazon managed to bring the company’s revenue to its all-time highs, it’s also the most popular e-commerce platform that likely had to face the biggest challenges once the demand for online shopping increased. Therefore, the U.S. retail giant had to expand its team significantly and now employs over 1 million people for the first time ever.
Similarly, Alibaba Group welcomed 150 126 people to join their team in 2020, resulting in a nearly 60% increase from 2019. On the contrary, eBay lost 600 people in 2020 (4.51% decline compared to 2019), yet the company still managed to keep its revenue per employee nearly 3 times higher than its competitors.
The HelpCenter app’s co-founder Ernestas Petkevicius commented on the challenges of the coronavirus outbreak:
“It is clear that COVID has put some of the workers in these companies at greater risk than others. Amazon and Alibaba have many more frontline workers and also had to hire many more new employees to keep up with demand, while Ebay was exempt from this huge issue and was more efficient as a result. Nevertheless, it is impressive how all of them dealt with the coronavirus issues and grew top line revenue at immense pace.”
Onboarding new people and managing thousands or, in Amazon’s case, over million of people brings various organizational challenges, hence, can impact employee engagement which is vital not only for controlling costs but can also lead to up to 18% higher growth in revenue per employee.
Although all three companies have officially presented plenty of steps to support and protect their workers, some were criticized for taking weeks to implement the measures, which left employees irritated.
To get the best out of the e-commerce golden age, businesses will have to keep an eye on ongoing trends and adjust, quickly – not only by meeting customer demands but sincerely caring about those who also are a crucial part of further growth, their employees.
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