Technology

China’s e-commerce giants get a boost as consumers continue to shift online after coronavirus

Drivers for Meituan and Alibaba-owned Ele.me en route to delivering items to customers in Guangzhou, China.

Arjun Kharpal | CNBC

China’s e-commerce and food delivery giants are reaping the benefits of an increasing number of consumers shopping online and businesses trying to digitize, trends accelerated by the coronavirus outbreak.

Chinese players have recently reported strong earnings for the second quarter as lockdown rules in the world’s second-largest economy relaxed. 

“Post COVID-19, the pace of digitization continues to accelerate and the shift from offline to online, in particular for individual shopping, is becoming a habit for consumers,” Jefferies said in a recent note discussing Alibaba’s June quarter earnings. 

Meituan Dianping, China’s biggest on-demand delivery services firm, reported net profit of 2.2 billion yuan ($319.5 million), a more than 152% year-on-year rise. That compared with a loss of 1.58 billion yuan in the March quarter of 2020. 

While operating profit for Meituan’s in-store, hotel and travel segment declined 11.9% from last year, food delivery saw a more than 65% uptick, as an increasing number of people ordered meals to their homes. And Meituan also said that the number of newly-onboard branded merchants increased by more than 110% on-year in the second quarter.

“The pandemic has accelerated the restaurants’ online migration, increasing the mix of high-quality merchants on our platform during the period,” Meituan said in a press release. 

Meanwhile, Alibaba reported revenue of 153.75 billion yuan for the April to June quarter, a 34% year-on-year rise. That growth rate was higher than the one recorded in the first quarter of the year. And like Meituan, Alibaba’s on-demand delivery service Ele.me, also saw some improving numbers.

“Ele.me food delivery GMV (gross merchandise value) growth turned positive in April and improved during the quarter as lockdown measures for the pandemic in China were lifted,” Alibaba said in its June quarter earnings release last week. 

JD.com, Alibaba’s rival, also posted strong earnings. The company said net income for the June quarter was 16.45 billion yuan ($2.32 billion), rising over 2,500% year-on-year. 

“Since the COVID-19 outbreak, JD has steadfastly leveraged our distinctive supply chain and technology capabilities to contribute to society and ensure the steady supply and undisrupted delivery of daily necessities to consumers,” Richard Liu, CEO of JD.com, said in the company’s earnings statement earlier this month. 

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