Alibaba has released its financial report for the fourth quarter of 2018 (Note: Alibaba’s financial year isn’t in sync with the calendar year; it starts from the 1st of April of each year and ends on March 31st of the following year). The financial report shows that Alibaba’s fourth-quarter revenue was RMB 61.932 million (about US$ 9.873 million), which represent an increase of 61%. Without non-GAAP calculations, net profit was RMB 14.099 billion (US$2.248 billion), an increase of 35% YoY.
This article will take a closer look to Alibaba Group’s situation so you can see the influence of the group over China.
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Before to start…
You may certainly have heard about Alibaba group or his founder Jack MA. The group concentrate its activities on internet. Among them there is: online shopping, cloud computing, popular social media, music industry, online games, and many others. Alipay, leader of the mobile paiement, is also part of their field of activity. It was established in 2004 and Alipay overtook Paypal as the world’s largest mobile payment platform in 2013.
Another bright year for Alibaba group
A strong profitability and Cash Flow
According to Alibaba’s March quarter 2018 earnings report, the core commerce segment represents US$ 8,176 million, another increase of more than 60% for the group. Daniel Zhang, the Chief Executive Officer of Alibaba Group said “our core commerce segment continued its significant growth and strong cash flow at large scale, enabling our aggressive investment in cloud computing, digital media and entertainment to drive the digital transformation of the economy and high-quality consumption across China”. They also “continue to see strong growth and mark
et leadership” in China.
March 2018 : 552 million active consumers
Alibaba group got over the 12-months period ended December 31, 2017 more than 37 million new consumer engagement, reaching 552 million of annual active consumers, an increase of 21,6%. It represents a new high since 2016.
According to the previous CNNIC report, at of the end of 2017, the number of online shopping users in China was 533 million, which was lower than the number of active consumers in Ali. Therefore, we believe that the number of Alibaba’s users may include offline customers. Alibaba group cannot simply be compared with other e-commerce companies.
Record transaction volume
FY 2018 the gross merchandise volume is US$ 768 billion, representing a 28% YoY growth. Alibaba group is present in many sectors and plays on its activities’ synergy. Take a look on our article about the analyze of the marketing strategy of Alibaba in China.
Bonus : about Alibaba’s activities
Alibaba, is regarded as the Chinese Ebay and Amazon, has even been recorded as a case study for the business courses in Harvard University. However, Jack Ma (Ma Yun), has stated once again that such description doesn’t suit : “All these explanations about Alibaba are not accurate. People just use standards abstracted from other companies and impose them on Alibaba”
A data company, not a retail company
The group as we talked about it before, has activities on several sectors in China. Although according to Jack Ma, Alibaba is the largest retailing platform in the world, it is actually not only a retail company but most a data company. Alibaba has around 800 million to 1 billion users and its user base is estimated to hit 2 billion by 2036.
Alibaba group can lead its users from one of its platforms to another one, playing on its wallet of activities to keep its leading position and influence over the Chinese market.
Digital media and entertainment
Alibaba is also developing in social media and entertainment sectors with Weibo, china’s most popular micro-blogging site and Xiami, a music software. This is a strategic choice as Chinese people are spending a lot of time on entertainment’s activities. Moreover, the growing middle class in China will increase this trend beyond basic material needs.
The group is leveraging a synergy between their commerce business and entertainment. It can deliver insights about their consumer’s interests and preferences, improving user experience and increasing customer loyalty.
Being the leading figure among e-commerce platforms in China has allowed Alibaba a reputation in the global business world. Taobao and Tmall two unavoidable e-commerce platforms in China are both hold by the group (click here, to see what’s the main difference these sites).
Tmall is a B2C plarform of Alibaba Group, lauched in 2008, it has become one of the most popular online sales channel in China. The latest full fiscal year 2018 results showed that Tmall is reaccelerating growth. It recorded 45% year-over year growth for physical goods GMV, reflecting strength in apparels, home appliances and consumer electronics categories.
Since last year, Tmall has been pushed toward high-end fashion by launching “Luxury Pavilion”, its brand new section for premium and luxury brands. It collaborates with well-known brands such as Hugo Boss, Burberry, Guerlain and Zenith, courting super-wealthy Chinese shoppers
E-commerce in China, why you need an online presence
Foreign companies were amazed by the success of Chinese e-commerce landscape, which surpassed that of other countries in the world a long time ago.
Chinese consumers are the most connected and are nowadays doing almost all their consumption online. Nowadays, before to purchase something, they first go on internet or social media’s platforms to get information and advices. Brands and companies have to manage their online communities, their online brand reputation and product awareness to keep developing in China.
At this stage of development, China has a lot of booming industries. This is a promising and huge market with its own culture and way to function. Want to start a business in China? Do not hesitate to contact us for more information. Gentlemen Marketing Agency is specialized in the digital marketing in the Chinese market. We provide e-commerce solutions, including Tmall Global, promotion and advertising, SEO strategies for brands and companies who want to come to China.
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