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Mom-and-pop stores beat 11% of Chinese listed companies in profitability

Written by Song Jingli Published on 

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Over 1,000 shops that buy goods on Lingshoutong have made more than RMB 1 million (USD 142,686) in net profits.

With all the news about China’s retail giants, a report from local outlet 36Kr on Monday shows there’s still room for the little guy. The report cited data released by Lingshoutong, an Alibaba-owned wholesale platform used by small brick-and-mortar stores to stock their goods.

According to the data, over 1,000 shops that buy goods on Lingshoutong have made more than RMB 1 million (USD 142,686) in net profits. Out of the roughly 1,500,000 stores that use the platform, the vast majority are independent grocery stores.

Putting the figure in perspective, 36Kr noted that the sum—while seemingly small–still put these stores above 11% of companies publicly listed in mainland China in terms of profits.

It is worth noting, however, that profits do not necessarily equate to success for large, traded companies. Some Chinese firms that have clocked net losses in the last fiscal year are Pinduoduo, with a USD 1 billion loss, and JD.com-backed on-demand grocery delivery startup Dada Nexus, at USD 235.8 million.

Read more: Could this startup become the leader in China’s fragmented online procurement industry?

Nevertheless, the finding suggests that Lingshoutong, which competes in the retail procurement industry with JD.com’s Zhangguibao, Best’s Store+, and startups such as Yijiupi, is doing something right. Revenue from Alibaba’s commercial wholesale business in China, of which Lingshoutong is a part along with 1688.com, reached RMB 2.8 billion (USD 394 million) in the first quarter, up 9% year-on-year.

The e-commerce giant attributed the strong performance to an increase in revenue from Lingshoutong as well as an increase in average revenue from paying members on 1688.com, its domestic wholesale marketplace.

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