Crowds are flocking to Alibaba’s online shopping mall

October 27, 2015, 6:50 PM UTC
Photo by Bloomberg — Getty Images

For many years, the fastest growing part of Alibaba’s business was Taobao, an eBay-like online bazaar that sells everything from drones to live scorpions to jeweled iPhone cases. But that’s changing, as the Chinese e-commerce giant’s virtual mall, Tmall, grows more quickly than Taobao.

As revealed in Alibaba’s earnings report Tuesday morning, total sales volume on Taobao in the quarter ending September 30 was $69 billion, up 15% compared to the same quarter in 2014. Sales volume on Tmall was less at $43 billion, but saw an increase of 56% compared to the same quarter a year earlier.

Tmall’s fast growth could foreshadow a new era for Alibaba as a growing destination for Western brands like Macy’s (M) and Unilever (UL), which are have already signed on with the company to sell to Chinese consumers. Alibaba founder and Chairman Jack Ma has been outspoken about his goal of bringing U.S. and other international brands onto Tmall to fuel growth.

Alibaba also recently brought on Goldman Sachs banker Michael Evans as president to oversee this international expansion.

When analysts pressed Alibaba executives on Tuesday’s earnings call about the difference in growth between Taobao and Tmall, CEO Daniel Zhang emphasized that the two marketplaces are separate brands. But he said that he sees the two sites working together to achieve Alibaba’s goal of reaching $1 trillion in annual sales volume by 2020, compared to $385 billion at the end of the fiscal year in March.

“We are on track to achieve this,” Zhang added on the call.

Alibaba disclosed that it added 19 million new active buyers, bringing the company’s total active buyers to 386 million in the previous 12 months ending in September. In contrast, it had 367 million in the 12 months ending in June 30.

Maggie Wu, Alibaba’s chief financial officer, explained that most of these new buyers are coming to Alibaba using mobile devices and apps.

Although the Chinese economy’s growth is slowing, Alibaba Vice Chairman Joseph Tsai is optimistic that the company’s revenue won’t take a hit. On the call, Tsai said that Chinese consumers tend to save their cash, giving them a cushion that lets them continue spending in an economic downturn.

“A temporary setback in the macroeconomy won’t effect the consumption patterns in a fundamental way,” Tsai said. He added that Chinese consumption as a percentage of the country’s economy is still below that of more developed countries, indicating the growth potential, and the “tailwind driving consumption growth,” in China.

“The way we look at it is, the Chinese economy is growing gangbusters. Are we going to benefit from this? Absolutely we will,” Tsai said.

Alibaba’s shares (BABA) rose 4% to $79.45 in mid-day trading, after the company beat Wall Street expectations on earnings.

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