Alibaba projects 49 per cent growth in year ahead

Heather McIlvaine

13th Jun 2017

Speaking to investors at Alibaba headquarters in Hangzhou, China, last week, chief financial officer Maggie Wu revealed the e-commerce company is expecting revenue growth of 45 to 49 per cent for the year ending March 2018.

This exceeds the consensus estimate from analysts by 10 percentage points and, if achieved, will be the highest annual increase since Alibaba went public in 2014.

Besides the company’s core retail business – primarily consisting of the Taobao and Tmall e-commerce platforms – Alibaba today has a presence in logistics, payments, cloud computing, digital marketing and media and entertainment.

Daniel Zhang, Alibaba’s chief executive officer, said the company constitutes “an economy unto itself”, with the synergies between the different businesses driving its ambitious outlook. He said data is the common factor across all parts of the business. For instance, data collected from the new media and entertainment arm can be analysed and applied by retailers.

Wu said Alibaba’s evolution from an e-commerce marketplace to a larger ecosystem is changing the way analysts should measure the company, as it has become less reliant on taking a percentage of every purchase for cash flow. Customer service and other services need to be considered, she said.

Alibaba itself is also changing the way it measures performance. The company has renamed a metric called “online marketing revenue” to “customer management revenue” and will start calling its customers “annual active consumers” rather than “annual active buyers”.

“Nowadays, we see more and more people are consuming content, services, lifestyle kind of products on our platform,” Wu said.

The Taobao mobile app is one example of this. Zhang noted that the app has become a social commerce platform, where the fun of discovery, experience of exploration and social aspect – rather than consumption – encourage people to come back again and again.  The app now has over 500 million monthly active users.

Zhang said Alibaba will continue to invest in its core commerce business to gain B2C market share, improve the experience and expand the consumer base. “What we’re doing now after the mobile transition is optimising based on data,” he said.

“How do we leverage insights about customers to help sellers upgrade the business not only from a sales side, but from a supply, manufacturing and design side. We strongly believe the end of the world is not C2C or B2C, it’s C2B.  How does that happen? It’s all about consumer insight,” he said.

In the meantime, Alibaba founder and executive chairman Jack Ma told investors the company is sticking to its target of hitting US$1 trillion in gross merchandise volume in the fiscal year ending March 31, 2020, as well as creating 100 million jobs and serving 2 billion customers.