Written by: Lindsey Boycott
In a world rocked by COVID-19, few stocks have come through the recent months the way the Alibaba Group has done so. With brick and mortar stores closing, people turned to online options for their consumer needs. For those investors looking for a prime stock pick, Alibaba (NYSE: BABA) beats out Amazon (NASDAQ: AMZN) as a more affordable choice while still providing lots of room for growth.
Much of that growth can be credited to the firm's move into cloud computing. Amazon Web Services is the current leader in the cloud market, but BABA holds fourth place and is expanding quickly – thanks to a $28 billion commitment over three years to building out its cloud infrastructure. In its last quarterly report given in February, Alibaba stated its cloud revenue increased by 62 percent to $1.5 billion and is the leading cloud provider for the Asia Pacific market.
Alibaba is also making inroads into the United States and recently expanded the offerings to its US merchants. Small to medium-sized businesses who do cross-border inventory orders often have a lot of their capital tied up in those costs, but the Chinese e-commerce giant is giving them another option. In partnership with MSTS, the B2B platform has rolled out Alibaba.com Payment Terms, allowing merchants to defer payment for up to 60 days on goods purchased.
“I’ve seen 20 years of transformation happen in the last two months,” John Caplan, president of Alibaba.com’s North America and Europe divisions. The pandemic has compelled many businesses to move online, and the e-commerce giant has grown in response. "COVID-19 has had a massive negative impact on the global economy. Digital has gone from a got-to-have [business tool], to a must-have."
BABA also announced Alibaba.com Freight – a tool that gives merchants the ability to shop for ocean and air freight options through its new partnership with Freightos. Their customers can also set up payment terms, create contracts, send invoices, and make online payments. This improved functionality gives smaller operators the chance to compete with larger outfits with more resources.
"The playing field should be fair," Caplan said. "Ultimately, our goal is to give [SMBs] even greater access to the $23.9 trillion global B2B e-commerce opportunity – which is six times the size of the B2C e-commerce market. This is a game-changer for small businesses in the US."
The firm expanded into the United States in July 2019 and grew 70 percent year-over-year in that time, while transactions involving American business jumped up 100 percent. On the global front, Alibaba.com surged up 85 percent, with revenues reaching $16 billion for the quarter ending March 31. The US is the B2B platform's fastest-growing segment, followed by Australia, Canada, the UK, and Germany.
DISCLOSURE:The views and opinions expressed in this article are those of the contributor, and do not represent the views of Advisorpedia. Readers should not consider statements made by the contributor as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click here.