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On the evening of August 15, Alibaba released its first quarter financial report for the 2025 fiscal year ending June 30 (Alibaba's fiscal year is from April to March of the following year). The financial report data shows that the group's operating profit this quarter decreased by 15% year-on-year, and its net profit decreased by 27% year-on-year. As for Taotian Group, the growth rate of GMV is still a certain distance away from the growth rate of customer management, and the commercialization of Taobao and Tmall is under pressure. In order to improve the monetization ability of the core e-commerce business, Taotian has successively launched a "combination punch" since the second half of this year, increasing commissions from merchants and launching new marketing tools. In addition, after giving up price power and turning to GMV-oriented, how to find a stable profit model in merchant management will also become a new challenge for Taotian Group.

Commercialization and monetization are under pressure

According to the financial report data released by Alibaba this quarter, during the quarter ending June 30, the group's revenue was 243.236 billion yuan, a year-on-year increase of 4%, while the operating profit was 35.989 billion yuan, a decrease of 15% compared with the same period last year. The net profit attributable to ordinary shareholders was 24.269 billion yuan. The net profit was 24.022 billion yuan, a year-on-year decrease of 27%.

Alibaba explained this in its financial report. Alibaba said that the decline in net profit this quarter was mainly due to the decline in operating profit and the increase in investment impairment, which was partially offset by the change in the market value of its equity investments.

In terms of specific business, Alibaba is still under great pressure. Although the period covered the "6.18" period, in this quarter, Taotian Group's total revenue decreased by 1% year-on-year. On the premise that China's wholesale business revenue achieved a year-on-year growth of 16%, China's retail business revenue decreased by 2% year-on-year. Among them, direct sales and other business revenues fell 9% from 30.167 billion yuan in the same period last year to 27.306 billion yuan, while customer management revenue increased slightly by 1% year-on-year.

"Changes in the external consumption environment and the diversification of channels have weakened the boosting effect of big sales in the performance of e-commerce companies," said Jiang Rong, an e-commerce research expert.

In contrast, Taobao's GMV in the second quarter continued the growth of the previous quarter, achieving high single-digit year-on-year growth in GMV and double-digit year-on-year growth in order volume in this quarter. 88VIP also increased from more than 35 million in the previous quarter to more than 42 million.

There is a mismatch between the growth rates of GMV and customer revenue, which was reflected in the last quarter. In the fourth quarter of fiscal year 2024, the growth rate of Taotian’s customer revenue has lagged behind the growth rate of online GMV. When GMV returned to double-digit growth, Taotian Group’s customer revenue only increased by 5% year-on-year last quarter. For Taotian Group, the commissions and promotion fees paid by merchants to the platform constitute Taotian’s main source of profit.

It seems that although GMV has grown at a high level for two consecutive quarters, the commercialization and monetization pressure faced by Taotian Group is only increasing.

Strike a "combination punch"

"For Taobao and Tmall, the current priority is to enhance the user's purchasing experience, thereby driving user purchase frequency and GMV." In the first quarter earnings call for fiscal year 2025, Alibaba's management explained the reason for the mismatch in growth rates between GMV and CMR (customer management revenue) as follows: "Once the market share is initially stabilized, starting from this quarter, our measures to increase monetization rate and commercialization will begin to accelerate."

Only by retaining users can we talk about growth. For Alibaba's core e-commerce business, after retaining users, how to improve its own profit margin has become one of the important goals. At present, Taobao and Tmall have begun to use a "combination punch". On July 26, according to the latest merchant rules released by Taobao, starting from September 1, Taobao and Tmall will charge merchants a service fee of 6‰ (six thousandths) for transactions that have been confirmed. At the same time, Xianyu, which is affiliated with Taotian Group, also issued an announcement, announcing that it would charge sellers a basic software service fee of 0.6% starting from September, with a maximum charge of 60 yuan per transaction.

Before this, Taobao did not charge transaction commissions. After the new regulations came into effect, like other mainstream e-commerce platforms, Taobao merchants need to pay commissions to the platform in addition to advertising fees.

On the same day as the financial report was released, Taotian Group announced that Alimama's new tool "full site promotion" will be open to all Taobao and Tmall merchants. As a new tool released in April this year, "full site promotion" was highly anticipated by the management after its launch. The essence of "full site promotion" is to activate the global traffic of the entire system, turn the display space of the product into an advertising space, and clearly mark the price.

"Taotian's future strategic direction is already very clear." Zhuang Shuai, an expert in the retail e-commerce industry and founder of Bailian Consulting, pointed out to reporters that by helping merchants increase GMV and profits, Taotian Group will be GMV-oriented and regard commissions and service income as core profits in order to form a virtuous cycle of development.

What drives growth?

In terms of the group's other business revenue, Alibaba International Digital Business Group and Cainiao continued to carry the banner of growth this quarter. On May 20 this year, one month after Alibaba invested $230 million in Lazada, AliExpress reached a cooperation with Brazilian retailer Magalu, and Alibaba will also charge commissions for AliExpress products sold on Magalu. Through the integration of internal resources and cooperation with external businesses, the growth of the international digital business sector is also reflected in the financial report.

According to the financial report, Alibaba International Digital Business had revenue of 29.293 billion yuan this quarter, a year-on-year increase of 32%, while Cainiao Group had revenue of 26.811 billion yuan, up 16% from 23.164 billion yuan in the same period last year. However, the growth rates of the two business sectors slowed down compared with the previous quarter.

Taobao also reduced the importance of price power in its e-commerce business in July. It is understood that in Taobao's new algorithm logic, GMV will replace price power as the new core indicator, and the core of traffic distribution will become "experience points" including logistics, praise rate, refund rate and other indicators. The "refund only" policy for merchants will also be relaxed.

"Judging from Taotian's current actions, the platform will be GMV-oriented in terms of merchant management." Zhuang Shuai said that Taotian will continue to optimize its internal processes in the future and conduct organizational assessments of merchants with the goal of optimizing consumer experience. "The addition of AI technology will also bring more space for the platform's merchant management work."

Beijing Business Daily reporter He Qian and Qiao Xinyi