The "Double 11" event has just concluded, and on November 15th, Alibaba (HK09988, stock price HKD 87.20, market value HKD 1.67 trillion) submitted its report for the second quarter of the 2025 fiscal year (quarter ended September 30, 2024).
According to the financial report, Alibaba's revenue for this quarter was 236.503 billion yuan, a year-on-year increase of 5%, and the net profit attributable to common shareholders was 43.874 billion yuan.
In terms of highly anticipated e-commerce business, this quarter, the growth of GMV on Taobao's online platform was driven by double-digit year-on-year growth in order volume. Order growth was mainly driven by an increase in purchase frequency, partially offset by a decrease in average order amount.
In addition, Alibaba also mentioned the results of this year's "Double 11". During this year's "Double 11" period, Taobao and Tmall GMV achieved strong growth, and the number of buyers reached a historical high.
Regarding this financial report, Alibaba Group CEO Wu Yongming stated that this quarter, Taobao's business continued to invest in user experience, enrich product supply, and better serve consumers. He expressed greater confidence in the prospects of the core business compared to the past and will continue to invest in supporting long-term growth. The operational efficiency of other businesses will continue to improve, and most businesses will continue to enhance profitability or reduce losses.
It is worth mentioning that in this quarter alone, Alibaba has made many moves in its e-commerce business. Since September 1st this year, Taobao has started charging basic software service fees based on confirmed GMV for transactions on the platform. In July, Taobao announced the optimization of its "refund only" strategy. In addition, this quarter, Taobao has cancelled and refunded merchant annual fees and improved merchant operational efficiency through "full site promotion". This series of actions may indicate that Taobao has a new strategic direction in its e-commerce business.
It is worth mentioning that this quarter's financial report shows that Alibaba has continued to repurchase shares, investing $4.1 billion to repurchase 414 million ordinary shares this quarter, resulting in a further net decrease of 2.1% in outstanding shares compared to the end of June.
Increasing investment in e-commerce business: high expectations for the growth of Taobao users
For this quarter, Alibaba has increased investment in both domestic and overseas e-commerce businesses and made many layout actions.
As for Taotian Group, the financial report mentioned that this quarter, Taotian has increased investment in strategic measures such as competitively priced products, customer service, membership system benefits, and technology, aiming to enhance user experience. These measures have resulted in higher purchase frequency and better feedback on the overall shopping experience compared to the same period last year.
At the analyst conference call that evening, Alibaba executives detailed that for the Taobao and Tmall platforms, the current strategy is to increase investment in the entire user experience and merchant side while improving profitability. "In terms of investment, there will be multiple ways, the first of which will be to expand the supply advantages, such as price power, new products, and competitive brands. At the same time, we will also provide users with a better user experience.
He also mentioned that he will continue to invest in technology platforms, especially in AI computing power investment for e-commerce. There are many AI related products under development, and these AI related products will require the use of relatively powerful AI computing power.
In addition, Alibaba further mentioned the value of 88VIP in its financial report. According to Alibaba, 88VIP members are the most purchasing power consumer group, and their number continued to grow in double digits year-on-year this quarter, reaching 46 million.
Alibaba mentioned that high-end consumers are loyal customers who can increase their purchase frequency and drive GMV growth. Therefore, it is committed to continuously increasing the number of 88VIP members by investing in enhancing member benefits and services.
It is worth mentioning that in September, Taobao announced that it will gradually open WeChat Pay to all Taobao and Tmall merchants after September 12th.
In response to this, during the analyst conference call, Alibaba executives stated that they have high expectations for user growth after connecting to WeChat Pay, and will make investments in user growth and retention in the medium to long term. "The future is a relatively large investment direction," he said. He stated that Taobao is still in the investment phase and will continue to focus on investment efficiency during this stage, while making better and larger investments by improving CMR.
It is worth mentioning that this quarter, whether it is the collection of basic software service fees based on confirmed GMV, the relaxation of "refund only" policies, or the direction of investment, Taobao has been trying to better balance its relationship with merchants and has put a lot of effort into improving their experience on the platform. In this year's Singles' Day, Taobao is no longer blindly offering low prices, and its attention to middle and high end consumers such as 88VIP is also increasing. This shows that its low-priced route is forming a misaligned competition with Pinduoduo.
In this conference call, Alibaba executives mentioned, "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's advantages in obtaining brand owners' budgets will expand in the future
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.
Alibaba's investment in overseas e-commerce business is still significant. This quarter, Alibaba International Digital Business Group's revenue increased by 29% year-on-year, and the economic benefits of AliExpress Choice business units improved month on month.
However, in the quarter, the International Digital Business Group's adjusted EBITA (earnings before interest, tax, and amortization) was a loss of RMB 2.905 billion, compared to a loss of RMB 384 million in the same period of 2023. This was mainly due to increased investment in cross-border businesses such as AliExpress and Trendyol, partially offset by a significant reduction in operating losses caused by Lazada's improved cash flow rate and operational efficiency.
Affected by cross-border business, Cainiao's revenue increased by 8% year-on-year to 24.647 billion yuan in this quarter, mainly due to the growth of cross-border logistics service revenue.
While increasing investment in e-commerce business, the financial report shows that in this quarter, the losses of both the local lifestyle group and the large cultural and entertainment group narrowed year-on-year, and the operational efficiency of the business was optimized in a planned and rhythmic manner. At the same time, orders from Ele.me and Gaode have increased, and their business scale has also improved.
Will e-commerce shift from a 'low price war' to an 'AI war'?
The presence of AI is still significant in this quarter's financial report.
Alibaba's financial report mentioned that focusing on the integrated development of "cloud+AI", Alibaba Cloud's commercial revenue growth has accelerated, with quarterly revenue increasing by 7% year-on-year. It is worth noting that AI related product revenue has achieved triple digit year-on-year growth for five consecutive quarters, driven by double-digit growth in public cloud; Adjusted EBITA increased by 89% year-on-year.
During the conference call, Alibaba executives stated, "We believe that the prelude to the AI era has just begun, and we are still in the early stages of API transformation. Our imagination for future AI will not be limited to mobile screens, but will ultimately impact and even transform various industries in the physical world by reshaping the digital world
According to the reporter's understanding, since the implementation of Alibaba's "AI driven" strategy one year ago, multiple businesses under Alibaba have been focusing on AI. In terms of e-commerce business alone, many products have already been launched.
Alibaba mentioned in its financial report that Taobao has launched its AI product "Business Manager" for all merchants. This year's "Double 11" event has served 4 million merchants and helped small and medium-sized merchants generate over 100 million products and marketing materials. Alibaba also mentioned that the penetration rate of AI driven marketing tool "full site promotion" among merchants has steadily increased, helping merchants improve their marketing efficiency and further rhythmically enhance their commercialization level.
In addition, on October 28th, Alibaba International Station fully upgraded its AI foreign trade products. According to data provided by Alibaba International, currently, over 60000 small and medium-sized enterprises worldwide are using Alibaba International's AI products, and the scale of AI released products has reached 7 million. Recently, Alibaba International also launched the world's first B2B AI search engine, Accio, which is open to global merchants and officially enters the AI Search track.
It is reported that users can use "plain language" to ask AI and make demands. Accio will actively sort out and understand what users really want through multiple rounds of dialogue, and use professional B2B industry knowledge to break down demands, research the market, provide suggestions, and more accurately screen suppliers and recommend products. Like a truly professional agent, Accio will provide one-stop intelligent procurement services.
In fact, many platforms have recently launched AI search products. Will the emergence and landing of AI products bring new changes to the e-commerce world?
Pan Helin, a member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, told the Daily Economic News reporter that AI search has two functions. One function is to help users find answers to difficult to find questions or search for links. Another function is to guide the links Alibaba and Tiktok want users to see in the optional search results. Therefore, this can bring traffic to e-commerce and content platforms, which is a new idea for the development of e-commerce.
In the eyes of industry insiders, the changes that AI can bring to the e-commerce world are not just about reducing costs and increasing efficiency. Zhuang Shuai, founder of Bailian Consulting, told the Daily Economic News reporter that AI is reshaping e-commerce. In his opinion, AI can not only enhance the attractiveness to merchants, but also bring about changes in profit models (service revenue can be significantly increased), improve the efficiency of new product development, increase differentiated supply, and reduce price competition.
It is worth mentioning that, while launching AI products and rushing to invest in AI start-ups in succession, there has even been a war of competition among Internet platforms.
On November 13th, according to the Science and Technology Innovation Board Daily, it was reported that Zhou Chang, a former employee of Alibaba's Tongyi Big Model, violated the non compete agreement. Alibaba has filed a lawsuit and submitted a labor dispute arbitration application. After Zhou Chang resigned in July this year, some media reported that he joined ByteDance in August to work on AI big models. In the long run, after the low price war, the AI war among the major Internet platforms may also affect the ranking of major e-commerce platforms in the e-commerce world.
For Alibaba, the entire 2025 fiscal year is already halfway through, and the highlight of "Double 11" has also come to an end. Under the leadership of the management, Taobao has shifted its business strategy and made further progress in interconnection. However, overall, Alibaba is still increasing investment in e-commerce business. It is still uncertain how many positive effects these new measures can bring to Taobao, which was previously trapped in stock competition. However, from the management's external statements, after a relatively short period of reflection, Alibaba's confidence in the future has returned.