BRIEF: Taobao launches $7 billion subsidy in instant retail wars

E-commerce giant Alibaba (BABA.US; 9988.HK) announced on Wednesday that its Taobao Flash Sale instant retail platform has launched a 50 billion yuan ($6.97 billion) subsidy program that will run for the next 12 months. The program aims to benefit both consumers and merchants, while accelerating the development of its large-scale consumption platform, the company said in a WeChat statement.

On the merchant side, Taobao will offer store, product and delivery subsidies, as well as commission waivers or reductions to help sellers preserve their profit margins and fill more orders. For consumers, the platform will distribute large discount coupons, “free order” cards, and official fixed-price subsidies to boost shopping incentives.

Taobao Flash Sale has grown rapidly since its launch in May. According to data released by Taobao, daily order volume for Taobao Flash Sale in collaboration with Ele.me has exceeded 60 million, with nationwide merchant order volume more than doubling month-on-month. Overall daily order volume in the instant retail market has grown from 100 million to 160 million since May, highlighting the sector’s explosive growth and increasingly fierce competition.

Alibaba‘s share closed lower on Wednesday, down 0.4% in Hong Kong at HK$109.4 and down 2.86% in New York at $110.71.

By Lee Shih Ta

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