Alibaba’s and China’s leading B2C e-commerce marketplace, Tmall, has reported GMV growth of 45% for the year ended March 31, 2018.
The latest set of financials from the world’s largest retailer confirms that growth in Chinese online retail continues to storm ahead, implying huge growth rates for providers of last-mile delivery and e-fulfilment logistics services.
The value of goods processed through Tmall (GMV) in the year amounted to $340bn. Its market share is approximately 50%, and Alibaba insist this is growing. Growth reflected strong sales in apparel, FMCG, home appliances and consumer electronics. As of March 31, 2018, there were over 150,000 brands on the platform.
Alibaba’s C2C marketplace, Taobao, reported GMV of $428bn, up by 22% year-on-year. Across both platforms, GMV amounted to $768bn, a rise of 28%.
Fundamentally, GMV growth is being driven by a larger online population and a greater willingness to spend. As at March 31, 2018, the number of mobile monthly active users across Alibaba’s Chinese websites stood at 617m, up by 22% year-on-year. Revenue per mobile user was up by 28%.
Turning away from domestic operations, revenue from international retail operations grew 94% year-over-year. Alibaba’s e-commerce marketplace in Southeast Asia, Lazada, which Alibaba acquired from Rocket Internet in 2016, will see a further $2bn of investment. It has already invested $2bn so far. Alibaba has also just acquired another Rocket Internet subsidiary, Daraz, for an undisclosed amount. Alibaba will move into Pakistan, Bangladesh, Myanmar, Sri Lanka and Nepal for the first time.
As for cross-border sales, Tmall Global is Alibaba’s platform for overseas brands and retailers trying to reach Chinese consumers, without the need for physical operations in China. As of March 2018, there were 18,000 brands from 74 countries selling into China through the platform. According to Analysys, during the nine months ended December 2017, Tmall Global was the number one cross-border e-commerce platform in China based on transaction value.
In its first full quarter of operations being reported in Alibaba’s accounts, its logistics arm, Cainiao, reported revenue from domestic and cross-border fulfilment services of $455m.
Looking ahead, Alibaba Group anticipates sales growth of over 60% for its next fiscal year.
Such high growth numbers alone suggest it is hard to keep track of a company like Alibaba. Then you consider that its ‘New Retail’ strategy suggests it does not just want to lead online retail in China, it wants to lead all retail in China, blending online and offline experiences, using data and technology. Through Hema, it is moving into grocery, aiming to deliver to customers who order online in 30 minutes. Their retail stores doubles as warehouses for online orders, with employees picking and packing alongside customers, with goods then moving on conveyor belts up the store walls to the ceiling, travelling over customers’ heads to an adjacent delivery hub. Outside of China, Alibaba is aggressively expanding cross-border sales, as well as domestic sales across Asia, particularly through its Lazada investment and acquisition of Daraz. Cainiao is a vast, complex and rapidly expanding manager of logistics. Alibaba’s founder Jack Ma recently said the company would soon open a logistics centre in France.
Like Amazon therefore, Alibaba is hugely impressive in multiple areas beyond online retail, including logistics. For retail supply chains, they will inevitably dictate much of their evolution in the coming years.
Source: Transport Intelligence, May 8, 2018
Author: David Buckby
