Its revenue went up 4% year-on-year to CNY243.24 billion (US$33.89 billion), but was 2% lower than earlier forecasts by analysts surveyed by the London Stock Exchange Group.
Its net income fell 29% year-on-year to CNY24.27 billion, "primarily due to a decrease in income from operations" and "increase in impairment" from its investments, the company said in a disclosure.
While sales from Alibaba's Chinese e-commerce platforms Taobao and Tmall Group fell by 1%, the company's overseas online shopping business, including Lazada and Aliexpress, saw a robust growth of 32%.
Alibaba, along with its rivals JD.com and discount-focused retail platforms such Pinduoduo and Douyin, are struggling to boost domestic sales amid China’s economic challenges.
"The spending slump in China is real. Consumers are spending less, downgrading purchases and becoming more rational," said M Science analyst Vinci Zhang, as cited by Reuters.
"So going into the second half of the year, Alibaba and JD.com will likely continue to face challenges."
Sales at China's mid-year e-commerce sales festival in June fell for the first time ever according to third party estimates, despite major platforms' efforts to dole out offers for an extended period.
Alibaba Group chief executive Eddie Wu said the priority for the domestic e-commerce arm Taobao and Tmall Group has been enhancing the user experience to boost gross merchandise value, a measure of sales.
"As market share stabilises, we can turn our focus to monetization," he said.