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Eyes on Quality of Alibaba’s Top-Line Growth

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Alibaba plays in a crowded market

In Alibaba’s (BABA) upcoming fiscal 2Q18 (September quarter) report, investor attention will probably be focused not only on its top-line figure but also on the quality of its top-line growth.

A study of the company’s revenue growth rate could provide a glimpse of how it’s coping with competition. Alibaba plays in a crowded and highly competitive e-commerce industry.

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Battle for India’s e-commerce market

Alibaba has dominated China’s (MCHI) e-commerce market. Now it seems to be in competition with Amazon (AMZN) and eBay (EBAY) for the global e-commerce market as well. India (INDA), a country whose retail e-commerce market is expected to be worth $39.5 billion this year, according to eMarketer, is one of the interesting global battlefronts for major e-commerce providers.

Amazon is investing $5.0 billion to build its business in India, largely from scratch. Alibaba has been making strategic investments in India’s e-commerce and digital payment–focused startups. For example, Alibaba has a substantial stake in India’s e-commerce and digital payments provider Paytm and was recently reported to be seeking to invest as much as $200.0 million in India’s online grocer Bigbasket.

The battle for India’s e-commerce market also features eBay, which earlier this year invested $500.0 million in Flipkart, a leading e-commerce company in India.

Is Alibaba’s growth accelerating?

When Alibaba reports its fiscal 2Q18 results on November 2, 2017, investors will probably be watching to see if its revenue growth is accelerating or decelerating, and by how much. In fiscal 1Q18 (June quarter), Alibaba’s revenue rose 56.0% year-over-year. Its revenue rose 60.0% in the prior quarter and 59.0% in the year-ago quarter, as you can see in the above chart.

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