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65% of Alibaba’s total GMV through mobile; takeaways from Q2 results

Alibaba flickr

Chinese ecommerce company Alibaba posted revenues of $3.49 billion for the quarter ended September 2015, representing a year-on-year growth of 32% . The company also said that the gross merchandise value (GMV) of transactions was $112 billion showing a growth of 28%. Some of the trends we observed during the results also mirror the situation of ecommerce players in India. Here are five takeaways we got from its results and earnings transcript.

1) Mobile growth is phenomenal

Mobile accounted for 62% of the total GMV at the end of the September quarter compared to 36% in the same quarter last year. Alibaba also added that mobile revenue stood at $1.7 billion, a growth of 183% y-o-y. “This year-on-year increase in mobile revenue in both absolute dollars and as a percentage of total revenue from the China commerce retail business was due to increase in mobile GMV and better monetization of mobile usage,” Alibaba chief financial office Maggie Wu said in an analyst conference call.

Alibaba mobile GMV

Readers will also remember that more than 70% of Snapdeal and Flipkart’s orders are on mobile.

2) Online-to-offline and omni channel networks

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Alibaba said that it is now focusing on pushing its online-to-offline model model where it partners with on the ground retailers to help with increasing their logistics network. Alibaba now has more that 180,000 offline stores across 330 cities in China as part of its omni-channel network. It also partnered with Suning Appliance Company, one of China’s largest electronics retail chains, to use its logistics network and services, to be made available to other merchants on Alibaba’s platform.

It’s worth noting that in India, Snapdeal launched Janus, a multi channel platform with focus on offline collaboration earlier this month. Rival Flipkart had also launched 20 offline centres across 10 cities in India, in conjunction with its logistics partner Ekart, where users could pick up their products from.

3) Cloud computing is rapidly growing

Alibaba is investing heavily into its cloud computing services. The division grew 128% year-on-year this quarter to $102 million and is the fastest growing segment in the company. “Cloud computing and Internet infrastructure revenue grew 128% year-on-year, primarily due to an increase in the number of paying customers and also to an increase in their usage of our cloud computing services, including more complex offerings, such as our content delivery network and database services,” Wu added in the call.

Alibaba cloud computing

4) Groceries emerging as a GMV category

Alibaba mentioned that apart from consumer electronics, mobile phones and large appliances, groceries are emerging as a major segment of its GMV mix. “Actually we can see a very clear trend that people buy day-to-day necessities from online platform because this is much more convenient than the offline brick and mortar chains and food and beverage and especially fresh food are very popular online today,” chief executive officer Daniel Zhang added in the call.

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5) Share-based compensation for employees to increase

The expense arising from Ant Financial’s share-based awards granted to Alibaba’s employees amounted to RMB 1,127 million ($177 million), RMB1,970 million and RMB202 million in the quarters ended September 30, 2015, June 30, 2015 and September 30, 2014. “We expect that our share-based compensation expense will likely increase, primarily due to anticipated increases in the fair value of share-based awards of Ant Financial, although share-based compensation expense driven by such increase would be non-cash and would not result in any economic cost or equity dilution to our shareholders,” the company added in its press release.



– Revenue for the quarter was RMB 22,171 million ($3.488 billion), an increase of 32% compared to RMB 16,829 million in the same quarter of 2014. The increase was mainly driven by the revenue acceleration of the China commerce retail business.

– Revenue from the China commerce retail business in the quarter was RMB 17,267 million ($2.717 billion), or 78% of total revenue, and increased 35% from RMB 12,769 million as compared to the same quarter of 2014.

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– China commerce wholesale business’ revenue in the quarter was RMB 1,046 million (US$164 million), an increase of 32% compared to RMB 790 million in the same quarter of 2014.

– International commerce retail business’ revenue in the quarter was RMB 481 million (US$76 million), an increase of 15% compared to RMB419 million in the same quarter of 2014.

– Net income for the quarter ended was RMB 22,754 million (US$3.58 billion), an increase of 665% compared to RMB 2,976 million in the same quarter of 2014.

Download: Press release and financials | Slides | Transcript 

Image source: Flickr User Clive Darra

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