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Just how reliable are Alibaba's e-commerce statistics? Doubts are mounting

By NexChange
Capital Markets, FinTech

There is no doubt that China’s internet usage is high, but analysts are increasingly skeptical that it is as stratospheric as top e-commerce companies claim.

For example, many merchants on Alibaba’s virtual market place fake sales in order to boost their rankings, according to Shaun Rein, founder of the Shanghai-based China Market Research Group. “The merchants all want five stars, and the way to do that is to fake orders,” he says in the Financial Times.

He estimates the amount of dubious orders on Alibaba at 20%-30% of gross merchandise value (GMV). Anne Stevenson Yang, head of Beijing-based J Capital Research, goes even further, charging that Alibaba’s GMV is up to 50% overstated.

“These companies are under pressure to show world beating growth in volumes [to attract funding and advertising] and the provenance of these statistics is unclear at best,” she says.

The numbers could be artificially boosted by the inclusion of non-commercial user accounts, such as social media, or by counting transactions that haven’t yet be paid for.

Last week, Alibaba announced that it had hit a target of Rmb3 trillion ($462 billion) in annual sales — more than the entire U.S’s e-commerce market for 2015. Is that believable?

Photo: Charles Chan

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