Alibaba downplays ecommerce reliance

The Chinese ecommerce giant has, for the first time, shied away from mentioning GMV figures in its earnings report, playing down the importance of their traditional ecommerce business to group revenue within a slowing economy.
Written by Cyrus Lee, Contributor

Despite Alibaba on Wednesday reporting a 55 percent increase in group revenue and a 41 percent increase in core commerce revenue for the September quarter, the company failed to mention the gross merchandise volume (GMV) for the first time since its listing in the US.

This indicates that the ecommerce giant may have started playing down the importance of its traditional ecommerce contribution to the group, said a Sina news report.

GMV is an important indicator in traditional ecommerce transactions as it reflects the total sales value for merchandise on a particular platform during a certain period of time.

Alibaba has been constantly highlighting its GMV figures previously to showcase its buoyant growth of Taobao and Tmall marketplaces. In March, the company announced a new milestone as it sold goods worth more than 3 trillion yuan ($443.8 billion) in the fiscal year ending that month. Alibaba also vowed to double that annual trading volume to 6 trillion yuan by 2020.

However, during a teleconference meeting for the investors in June, Alibaba's founder Jack Ma noted that the group will no longer publish GMV figures. Ma also recently announced that Alibaba will no longer use the label "ecommerce" as it has come into a "new retail era", according to the Sina report.

Despite that core commerce revenue expanding 41 percent to reach 28.5 billion yuan in the quarter, the pace is slower than the same period last year. Growth rate of active buyers on its online marketplaces Taobao and Tmall saw a downward trend during the quarter, said the report.

The slowing Chinese economy will inevitably have a negative effect on Alibaba's core commerce businesses after years of fast expansion, which may also bestir the Chinese leading ecommerce giant to consider transformation.

Alibaba's cloud unit sales grew 130 percent to 1.49 billion yuan, with the number of paying customers more than doubling to 651,000. The company claims that its cloud hosts and provides services for more than 35 percent of total websites in China.

Last year, Alibaba announced it set aside $1 billion to drive growth in its cloud business, Aliyun. Part of its $1 billion investment will be channelled toward building new datacentres in Japan, the Middle East, Europe, and Australia.

It also opened datacentres in both Singapore and Silicon Valley, its first facility outside its domestic market.

The company has also started harvesting from its entertainment unit, with the revenue expanding 302 percent to reach 3.6 billion yuan in the September quarter, the fastest-growing segment within the group.

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