Alibaba’s revenue hit an all-time high in the second quarter of the fiscal year 2018.
Editorial
On 2 November, Alibaba released its earnings for the quarter ended 30 September 2017. According to the financial results, Alibaba reached a total revenue of RMB55.1 billion (US$8.3 billion), a year-on-year growth of 61%. This has been the fastest growth since its IPO (Initial Public Offerings) in 2014.
Source: Alibaba Group
The booming core commerce business
The increase in revenue is driven by robust growth of its core commerce business. In the past quarter, revenue from Alibaba’s core commerce is RMB46.5 billion (US$7 billion), an increase of 63% compared to RMB28.5 billion (US$4.3 billion) in the same quarter of last year.
Source: Alibaba Group
Source: Alibaba Group
To enhance consumer engagement and royalty, Alibaba launched 88 Loyalty Membership across the Tmall and Taobao marketplaces in the past quarter. Members are tiered by loyalty scores based on their quality and frequency of spending and social engagement, entitling them to different levels of loyalty benefits. Over 29 million consumers participated in the Members Festival on August 8. Thanks to the 88 Loyalty Membership strategy, there was a significant increase in the monthly active users (MAUs) on Alibaba’s China retail marketplaces.
Sources: Alibaba Group
The rapid expansion of the New Retail
The New Retail Strategy combining online and offline stores is a key source of momentum to the growth. Jack Ma, the founder of Alibaba, set out the concept of “New Retail” in 2016 Computing Conference. “Pure e-commerce will be reduced to a traditional business and replaced by the concept of New Retail―the integration of online, offline, logistics and data across a single value chain”, said Mr Ma. Since then, Alibaba has launched a series of successful marketing campaigns to boost the New Retail Strategy.
The Taobao Maker Festival, hosted by Alibaba in July, is a grand offline showcase for millennial merchants from Taobao to demonstrate their creativity and aptitude for commerce. The shopping experience is about content consumption, lifestyle, and community. The festival attracted 100,000 people in five days, and it have been a great promotion for the online-offline integration. It contributed a lot in engaging young people, who now make up more than half of Taobao users.
Meanwhile, as part of the New Retail Strategy, Hema fresh grocery added new stores in major cities in China, bringing the total number of Hema stores to 20 as of September 30, 2017.
Further investments in international markets
Alibaba’s international commerce retail business revenue reached RMB2.9 billion (US$433 million) in the past quarter, representing a 115% year-on-year growth. The growth is largely due to Southeast Asian platform Lazada and China outbound platform AliExpress. The growth of Lazada and AliExpress helps to expand Alibaba’s international customer base. Alibaba will continue to invest aggressively in the nascent markets in Southeast Asia as well as launch innovative services to benefit consumers in the region.
Source: Alibaba Group
In October 2017, Alibaba announced the establishment of The Academy of Discovery, Adventure, Momentum and Outlook (DAMO), increasing the technological collaboration worldwide, advancing the development of cutting-edge technology and striving to make the world more inclusive by narrowing the technology gap. Alibaba said it would invest more than US$15 billion in DAMO for research and development over the next three years. This showcases that Alibaba will focus on technology and innovation to boost growth in the coming years.
