After the end of Singles' Day, on November 15th, Alibaba Group released its financial report for the second quarter of fiscal year 2025 (ending on September 30, 2024). The company's revenue for this quarter was 236.503 billion yuan, a year-on-year increase of 5%, and its net profit was 43.547 billion yuan, a year-on-year increase of 63%.
Although the growth was only in line with expectations, it was not too unexpected, but in the teleconference after the financial report, we can see that Taobao Tmall, which has been struggling with the low price strategy of Pinduoduo and the live broadcast e-commerce of Tiktok Kwai for a long time, gradually began to find its own misplaced competitive path.
This quarter, Alibaba increased its investment in the core business of e-commerce.
According to financial report data, the growth of GMV on Taobao's online platform this quarter was driven by double-digit year-on-year growth in order volume, which was mainly driven by an increase in purchase frequency, partially offset by a decrease in average order amount. When talking about the just passed Double 11, Alibaba Group CEO Wu Yongming said that due to the long marketing cycle achieved during this year's Double 11, not only did GMV grow, but the number of buyers also reached a historical high, and feedback from merchants and brands generally exceeded expectations.
During the conference call after the financial report, Wu Yongming expressed greater confidence in the prospects of the core business compared to the past. For the Taobao and Tmall platforms, the current strategy is to increase investment in user experience and merchant side aspects while improving profitability; At the same time, the operational efficiency of other businesses continues to improve, and most businesses continue to enhance profitability or reduce losses.
There will be multiple ways to invest in e-commerce business. On the one hand, it will broaden the supply advantage, such as price power, new products, and competitive brands. At the same time, we will also provide users with a better user experience, "he said.
Alibaba has indeed made many moves in balancing merchant relationships this quarter. In July, Taobao announced the optimization of its "refund only" strategy; Starting from September 1st, Taobao will start charging basic software service fees based on confirmed GMV for transactions on the platform. At the same time, Taobao will also cancel and refund merchant annual fees; Starting from September 12th, gradually open WeChat Pay to all Taobao and Tmall merchants and connect with JD Logistics.
On the technical side, Taotian has also launched a series of AI products this quarter. The brand new merchant marketing tool "full site promotion" is driven by AI to help merchants improve their marketing efficiency; Taobao has launched its AI product "Business Manager" for all merchants, serving 4 million merchants during this year's Double 11 shopping festival and helping small and medium-sized merchants generate over 100 million products and marketing materials.
On the user side, Alibaba also specifically mentioned the value of 88VIP in its financial report. The number of 88VIPs continued to grow in double digits year-on-year this quarter, reaching 46 million. Alibaba stated that high-end consumers are loyal customers who can increase their purchase frequency and drive GMV growth. Therefore, in the future, they will continue to increase the number of 88VIP members by investing in improving membership benefits and services.
It is worth noting that during this year's Double 11 shopping festival, Taobao is no longer blindly "offering low prices". In addition, its emphasis on middle and high end consumers such as 88VIP means that Alibaba is beginning to find a competitive approach that deviates from Pinduoduo's low price strategy.
In the field of live broadcast e-commerce, Taotian has also found its own dislocation competition mode with Tiktok and Kwai. Taotian is exploring the combination of platform and high-quality suppliers represented by Tmall flagship store brand products to form quality live streaming, which is also a resource relatively lacking in other platforms. Due to the difference in penetration rate of live streaming e-commerce compared to its peers, Taobao's live streaming still showed a significant increase this quarter and during this year's Double 11 period.
The growth rates of various e-commerce platforms are converging, so I think this year is a turning point. For brand owners, they will truly choose (platforms) that can bring them greater sales, rather than purely investing in growth. In this situation, Taobao and Tmall will expand their advantages in obtaining brand owners' budgets in the future, "Alibaba executives said on a conference call.
According to the financial report, Taotian Group's China retail commercial customer management revenue increased by 2% year-on-year this quarter, mainly due to the growth of online GMV. From the management's external statements this time, it can be seen that after previous adjustments and reflections, Alibaba has gradually found its positioning and confidence in the future in the struggle with its peers.