Business Quick Review | Alibaba "goes to the cloud" and resists involution in order to go further
2024-08-16
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Cover News reporter Meng Mei
On the evening of August 15, Alibaba Group announced its first-quarter results for fiscal year 2025. Strategic focus and sustained investment have paid off, with the two core businesses of e-commerce and cloud continuing to make positive progress: Taotian Group's online GMV maintained steady growth, and Alibaba Cloud focused on "public cloud + AI", with public cloud business revenue growing by double digits and AI-related product revenue growing by triple digits.
"This quarter's results show that our strategy is working. We focused on improving user experience through good products, good prices and good services, which led to Taotian Group's stabilization of market share and the return of its business to growth track. Cloud computing business revenue achieved positive growth momentum, thanks to the increased adoption of public cloud and artificial intelligence-related products. We will continue to invest to maintain our market leadership," said Wu Yongming, CEO of Alibaba Group.
According to the financial report, its e-commerce market share performance is stable, Taobao GMV maintains high growth, and the order volume increases by double digits; in terms of profit, the adjusted EBITA decreased by 1% year-on-year, exceeding market expectations. In layman's terms, although for Alibaba, there are wolves (JD.com) in front of the e-commerce market, tigers (Pinduoduo) in the back, and younger brothers (TikTok, Kuaishou) eyeing it, but as the "founding father" of China's e-commerce, Alibaba's e-commerce business is the largest in the country, and its share is stable. Combined with the data of total retail sales of consumer goods (the total retail sales of consumer goods in the first half of this year increased by 3.7% year-on-year, and the online retail sales of physical goods increased by 8.8%), such a large e-commerce business currently maintains a very stable operating and profitable state. Today, if the e-commerce business data significantly exceeds the overall level of the whole society, it is abnormal at this scale.
In addition to being stable, Alibaba's performance this quarter has undergone "inner changes" compared with the past. From the perspective of e-commerce business, Taotian's improvement in user service experience in the first quarter was not achieved by reducing investment in merchants or sacrificing the interests of merchants. Taotian's efforts to strengthen the platform's responsibilities and support for merchants are obvious to all. In the past quarter, Taotian has made many investments in the merchant ecosystem, such as free business advisors, increased platform voucher subsidies during the 618 period, freight insurance subsidies for merchants, and more than 20 free AI product tools for merchants.
The effectiveness of this series of measures was reflected before Alibaba released its financial report. For example, the new AI-driven advertising tool "full-site promotion" provides merchants with more business growth. During the 618 period, among the tens of thousands of merchants who used the product for internal testing, 130 merchants achieved transactions exceeding 10 million. At the same time, full-site promotion helped more than 1.5 million products to achieve an average GMV growth of more than 65% on a month-on-month basis in the 7 days after investment, and more than 300 single products had transactions exceeding 1 million. For example, during the 618 period, Taotian provided merchants with a number of services: payment upon delivery, freight insurance discounts, and credit loan interest rate discounts. Among them, the extremely fast payment amount is as high as 200 billion yuan... In order to better protect the interests and development of merchants, Taotian took the lead in opposing vicious internal circulation, and took the lead in announcing the full exemption of Tmall store annual fees, optimizing the refund-only policy, etc. For some controversial after-sales issues, the platform will play a greater role and coordinate the handling (including bearing some potential costs).
With multiple effects, according to the financial report, the number of 88VIP members continued to grow by double digits this quarter, reaching 42 million (based on a population of 1.4 billion, accounting for 3%, and you may occasionally encounter 4-6 88VIP members in a fully loaded subway car); at the same time, it also brought strong growth in Taobao's GMV revenue during the 618 period. In the fierce annual promotion competition, Taobao's market share continued to remain stable.
In addition to e-commerce business, Alibaba Cloud adheres to the "public cloud + AI" approach and has also formed a healthier revenue and profit structure. This quarter, public cloud revenue grew by double digits, and AI-related product revenue grew by triple digits. The quality of Alibaba Cloud's revenue and profits improved, with quarterly adjusted EBITA increasing by 155% year-on-year.
On June 7, Alibaba Cloud released the world's most powerful open source model, Qwen2-72B, which outperforms the most powerful open source model in the United States, Llama3-70B, and many other Chinese closed source models such as Wenxin 4.0, Doubao pro, and Hunyuan pro. Everyone can download the latest open source model of Tongyi Qianwen for free in the Moda community and Hugging Face. Compared with Tongyi Qianwen Qwen1.5 launched in February, Qwen2 has achieved a generational leap in overall performance.
Overall, behind the stable macro data in Alibaba's financial report, many business details, work directions, etc. have been quietly updated and upgraded compared to last year, and the core of the business has been completely renewed.
Alibaba's strategic focus and investment over the past few quarters have yielded significant results. The data for the first quarter of fiscal year 2025 reflects its positive performance in many aspects, including revenue growth, effective execution of strategy, business growth, and investment activities. These data show that despite some challenges, Alibaba has maintained a steady growth momentum and is driving the long-term development of its business through continued investment and innovation. While reshaping the development path and competitive advantages of its core business, it has laid a solid foundation for long-term healthy and sustainable development.
