Alibaba Group Holding Ltd: Data Services Hold Huge Potential

Following Alibaba Group Holding Ltd (NYSE:BABA)’s blockbuster Singles’ Day shopping event, almost everyone on the Wall Street is talking about the mammoth sales figure of $9.34 billion in a single day. Meanwhile, Morgan Stanley analysts Angela Moh and Robert Lin took a trip to Hangzhou, the headquarters of Alibaba. After the trip, analysts seem to be even more optimistic about the stock. Morgan Stanley has an Overweight rating on the stock with $118 price objective.

Alibaba invited partners to share the experience

Moh and Lin said in a research note that  the 278 million orders received on Singles’ Day were seven times higher than the daily average orders of 39.7 million in 12 months ending June 2014. After the Nov.11 promotional event, Alibaba had invited several brands, distributors and logistics partners to share the experience. Morgan Stanley analysts met dozens of executives from companies like SF Express, YuanTong Express, Cainiao, Lily & Beauty, and Daphne.

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Data insight was the hottest topic at the meeting. Morgan Stanley analysts said that the usage of data played a crucial role in helping logistics partners and merchants prepare better for the shopping event. The research firm sees it as a competitive advantage. Together with its affiliates such as Youku, Alipay and Weibo, the Chinese online retailer has a huge amount of data that it has just begun to leverage off.

Commercializing data services could boost Alibaba’s profitability

The company plans to build a full-scale analytics platform. Alibaba could improve its profitability through commercialization of data services. The Chinese company’s gross merchandise value jumped 57% from last year to $9.34 billion for Singles’ Day. Alibaba, which started the holiday event in 2009, aims to make it an international event by 2019.

Alibaba broke the Guinness World Record for highest online sales in a single day. In fact, its Singles’ Day sales exceeded the 2013 U.S. holiday sales from Thanksgiving through Cyber Monday by a staggering 77%. Last year, according to comScore, U.S. consumers spent $5.3 billion for online purchases between Thanksgiving and Cyber Monday.

Alibaba shares jumped 1.30% to $119.74 in early trading Thursday.