On the evening of November 16th, Alibaba released its second quarter report for the 2024 fiscal year as of September 30th (Alibaba's fiscal year is from April to March of the following year). From the data, Alibaba's overseas and logistics business growth rate is impressive, far surpassing domestic retail. The revenue growth rate of Taotian Group in the third quarter has dropped from 13% in the previous quarter to 4%. It is obvious that after drastic structural adjustments in the past two years, Alibaba still finds it difficult to break free from the anxious struggle with other top competitors, among which domestic competition is more challenging than overseas competition.
Double increase in overseas and logistics business
Data shows that in the third quarter of this year, Alibaba Group's revenue was 224.79 billion yuan, a year-on-year increase of 9%; Adjusted EBITA increased by 18% year-on-year to 42.845 billion yuan; The operating profit was 33.584 billion yuan, a year-on-year increase of 34%.
It is worth noting that Alibaba's global business and logistics business have contributed to a high growth rate. Among them, the revenue of the digital commercial group was 24.511 billion yuan, a significant increase of 53% compared to 16.046 billion yuan in the same period last year. Adjusted EBITA has also narrowed from a previous loss of 750 million yuan to 380 million yuan. Alibaba stated that the narrowing of losses is due to the improved profitability of Lazada and Trendyol. Among them, international retail business saw a significant increase, with revenue increasing by 73% year-on-year to 18.978 billion yuan. The financial report mentioned that Alibaba International Digital Business Group is preparing for external financing.
And Cainiao's business development momentum is even stronger. In the third quarter, Cainiao's revenue was 22.823 billion yuan, a year-on-year increase of 25%, and its profitability significantly increased. After adjustment, its EBITA was 906 million yuan, a more than 6-fold increase compared to the same period last year. Alibaba stated that this is mainly due to the improvement in cross-border logistics performance solutions, logistics technology and other services, as well as the operational performance of domestic logistics business. It is understood that Cainiao Group has applied for an initial public offering in Hong Kong and has submitted A1 documents to the Hong Kong Stock Exchange.
Although still in a loss making state, Alibaba's international business is still expanding its territory. Recently, Alibaba International has completed the acquisition of Visable, a local B2B digital trading platform in Europe. In September of this year, AliExpress and Cainiao officially announced the launch of the "Global 5-Day Express" international express line product, with the first batch landing in five countries: the UK, Spain, the Netherlands, Belgium, and South Korea.
In fact, Cainiao is also very clear that achieving high growth mainly relies on the increment of Alibaba International's digital sector, which achieves the growth of package volume through overseas self built logistics. But in reality, Alibaba's competition overseas is still crowded, with Temu, SHEIN, and TikTok Shop expanding significantly in Europe, America, and other countries. At present, after experiencing the swing of "fully managed" and "semi managed" platform models, AliExpress and Shopee are playing hard to part in Southeast Asia.
Domestic business under pressure
However, compared to the rapidly growing international and logistics businesses, Alibaba faces more challenging problems in the fierce domestic e-commerce competition.
After June 18th, Taotian Group's revenue growth in the third quarter returned to a low level, reaching 97.65 billion yuan, a year-on-year increase of 4%. In the previous quarter, the growth rate was 13%. In terms of customers, Taotian's customer management revenue was 68.66 billion yuan, a year-on-year increase of 3%. Although the growth rate of customer revenue is 7 percentage points lower than the previous quarter, it can be considered as stabilizing the downward trend compared to the consecutive quarters of last year.
In addition, mainly driven by strong revenue from consumer electronics and electrical appliances, Alibaba China's direct sales and other revenue from retail business reached 23.9 billion yuan in the third quarter, a year-on-year increase of 6%. However, Alibaba did not provide more description of Hema's profitability in its financial report, only mentioning Hema's contribution to operating losses and revenue. The early release of Hema has become a mystery. Alibaba stated that Hema's initial public offering plan is temporarily suspended and is evaluating the market conditions and other factors necessary to ensure successful project implementation and enhance shareholder value.
In terms of profitability, Taotian Group has stabilized its basic market position, with an adjusted EBITA of 47.08 billion yuan, a year-on-year increase of 3%. Alibaba stated that the growth was mainly due to the narrowing of several business losses and an increase in customer management profits, partially offset by the increase in investment in user acquisition, retention, and content by Taobao App.
Compared to the domestic retail business with relatively small growth, Alibaba's wholesale business benefited from providing value-added services for paid members, with revenue increasing by 18% year-on-year, reaching 5.09 billion yuan. It is reported that at the end of September this year, 1688 announced the launch of the membership supermarket "PLUS Membership Store", breaking through the C-end market on the basis of the B-end market and focusing on the "brand replacement" mentality. This to some extent reflects that Alibaba is finding ways to cope with the problem of domestic e-commerce dividend depletion.
Adjust, readjust
It is difficult for any e-commerce company to catch up with Alibaba's frequent and drastic changes. It can be said that since the end of 2021, Alibaba's business adjustments and spinoffs have almost been ongoing to this day. After Zhang Yong divided China's retail business into "China's digital commerce sector" and "overseas digital commerce sector", Dai Shan took office and fully integrated Taobao and Tmall in the backend. In March of this year, Alibaba divided its business segments into various groups. Subsequently, Dai Shan re planned the industrial operation and development center and clarified the responsible person. In November, Dai Shan increased the weight of 1688 and Xianyu, and 1688 President Yu Yong and Xianyu General Manager Ding Jian reported directly to Dai Shan.
At the same time, blown snow, known as the No.1 position on Taobao, as well as Zhang Yong, who created the "Double 11" and Tmall, resigned this year. Alibaba's former entrepreneurial team has once again returned to the center of the stage, and various changes are overwhelming. In 2022 and 2023, Alibaba did not disclose the total GMV of the "Double 11", but instead emphasized ecological prosperity and user retention. For example, in the progress of Taotian's focus on content development, Shaoyou, the head of Taobao's content business, once told Beijing Business Daily reporters that at present, more consideration will be given to whether users like it, whether merchants benefit from it, and whether it is beneficial for the content ecosystem.
The growth of the market and the strong attack of various e-commerce companies such as Tiktok, together with more rational consumption and investment by users and businesses, have made the stock grab among e-commerce giants particularly intense this year. A set of data provided by third-party data platform Star Map shows that during the "Double 11" period, the cumulative sales of comprehensive e-commerce platforms and live streaming e-commerce platforms were 1138.6 billion yuan, a year-on-year increase of 2.08%.
Perhaps due to a deep sense of competition crisis, the adjustment of the giants is still continuing after the big promotion. Recently, Xu Ran, CEO of JD Group, also served as CEO of JD Retail, while veteran Xin Lijun was appointed. Kwai and Tiktok also made adjustments in commercialization. In terms of Kwai, Wang Jianwei, a member of the Operation Management Committee, served as the head of the E-commerce Business Unit and the head of the Commercialization Business Unit, reporting to Cheng Yixiao, the chairman and CEO. Pu Yanzi, the head of commercialization of Tiktok Group, will also serve as the head of life service business because of her rich business experience.
How to reverse the bottleneck of traffic and commerce? Leading e-commerce companies are still striving to explore, and their struggles will continue to stick together. Taking Alibaba's domestic retail business as an example, Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, believes that the content oriented, local life real-time retail, and supermarket category self operation models represented by short videos and live streaming are all directions that can be broken through.
In terms of international business, Zhuang Shuai stated that if Alibaba's international business sector can closely rely on Cainiao's global network to build its own differentiation path, it will have an advantage in future competition.
Beijing Business Daily reporter He Qian, Qiao Xinyi