Alibaba Group Holding, the Chinese e-commerce giant, said on Tuesday it expected its total value of transactions in the second-quarter to be lower than previously thought, a fresh signal that China's slowdown is taking a bite out of consumer spending.
Alibaba is not the first company to flag the negative impact on sales of a weakening Chinese economy, but its sheer size makes it a bellwether. The company dominates e-commerce in China, where online spending is expected to hit $1 trillion by 2019, according to a report by research firm Forrester earlier this year.
At a tech conference in New York, Alibaba's head of investor relations, Jane Penner, said consumers were still willing and able to spend but the company had been seeing a "negative impact of the magnitude of the spending".
Alibaba now expects GMV, or gross merchandise volume, to be "mid-single digits lower" than its initial estimates in the quarter ending in September. GMV is the total value of transactions made on Alibaba's platforms and is one of the most closely watched metrics for e-commerce companies.
"We are still seeing actually high engagement by buyers on our platforms...but lower average order values, for example," Penner told Citi's Global Tech Conference, according to an online playback of the comments.
In August, Alibaba reported GMV growth of 34 per cent in the three months through June to 673 billion yuan ($106 billion), the slowest growth in more than three years.
Alibaba's shares slumped 4.7 per cent to end at $60.91 on Tuesday after earlier rising as much as 4.5 per cent. The share price has halved since its peak in mid-November.
The Chinese government has been trying in fits and starts to transition the world's second largest economy from being investment-dependent to a consumption-based model.
But there have been mixed signals as to whether that effort is bearing fruit. On Monday, the state planning agency said power usage, rail freight and the property market had all shown improvement since August, indicating that the economy was stabilising.
But the next day the government reported that imports shrank far more than expected in August, adding to global investors' concerns that the world's second largest economy may be slowing more sharply than earlier expected.
Global financial markets have been rattled in recent weeks by fears that China's slowdown could drag on already sluggish global growth, while adding to deflationary pressures by depressing prices.
Alibaba also said it expected growth in its AliExpress business to slow to low double-digits for the quarter ending September, due to weakening currencies in markets such as Russia and Brazil.
The AliExpress business is a global online marketplace for shoppers to buy directly from China. A majority of Alibaba's international commerce retail business revenue is generated by AliExpress.
Alibaba listed on the New York Stock Exchange in the world's biggest share offering in September last year. But worries on margins, slower growth in China and a sell-off in tech ADRs have all weighed on its shares, which now trade firmly below the IPO price of $68.