In Depth

Alibaba Appoints New Mobile-Centric CEO

Alibaba reported its fourth quarter earnings yesterday (May 7) and showed its continued dominance in mobile leadership in the eCommerce world, but the news of its newly appointed, mobile-focused CEO affirmed Alibaba’s position on driving its investments toward securing more mobile commerce.

While it wasn’t directly explained what led to the CEO change that will have Daniel Zhang, Alibaba’s Chief Operating Officer, stepping into the role currently covered by Jonathan Lu, a few comments during the company’s earnings call showed Alibaba may be geared toward a younger mindset — the most likely candidates to help drive up that mobile GMV.

“Alibaba had a strong quarter with significant growth across our key operating metrics,” Lu said in the company’s earnings call. “We grew revenue, gross merchandise volume and annual active buyers, and we expanded our unrivaled leadership position in mobile.”

And he had the numbers to back up his claims.

Alibaba grew its GMV across its retail marketplaces 40 percent, year-over-year, and saw its active buyers increase 37 percent to 350 million. It reached 289 million monthly active users on its mobile eCommerce apps in March alone, and saw $49 billion worth of mobile GMV during Alibaba’s fourth quarter. Mobile revenue (which accounts for 40 percent of total China commerce retail revenue) grew to roughly $846 million, which was a massive 352 percent annual increase from last year’s fourth quarter of roughly $187 million. Revenue, overall, saw a 45 percent year over year increase to roughly $2.8 billion from last year’s Q4 of roughly $1.9 billion.

While Ma wasn’t on the company’s earnings call with analysts, he did share some remarks in the statement about Zhang’s transition that indicates Alibaba is hoping to grow the company in a new direction with the “next generation of leaders.” It was pointed out in the earnings call that Alibaba has hired some young talent to help with its core business on Tmall. That, along with its new leader, could show that Alibaba is hoping fresh leadership can ignite more mobile growth. Lu will stay with Alibaba as a part of its board.

“Daniel is a proven international business leader and innovator with a strong track record of delivering results. He has the confidence of our entire management team, and there is no better person to lead Alibaba Group as we embark on the next stage of our growth on top of the strong foundation that Jonathan helped build,” said Jack Ma, Alibaba’s Executive Chairman.

Coming from being Alibaba’s chief operating officer, it’s likely Zhang’s strong investment toward the company’s mobile side helped him transition into the role that Ma clearly wants to be focused on all things mobile, especially with the strong mobile stats that Alibaba continues to impress with each quarter.

“When you look at this quarter’s mobile GMV, it already accounts for more than half of our total GMV. So that growth on mobile business pretty much exceeds everybody’s expectations, and that trend is continuing,” Alibaba’s CFO Maggie Wu said during the company’s earnings call with analysts.

She also shared Alibaba’s insights into how the company believes mobile monetization rates will shift over time from PC to mobile — and how consumer engagement on mobile has also shifted. This is likely to continue to rise, as Wu noted that 78 percent of transactions on Alibaba’s China commerce retail marketplace are paid through Alipay.

“We do believe that mobile take rate should approach PC or even higher than PC. The reasons are very simple, three things. We see more customers — we see more consumers from mobile. This you can already tell from MAU growth. So more buyers. And [the] second one is higher engagement. So people come through the mobile more often, more frequently than they did on PC,” Wu said, speaking toward how Alibaba has used data to increase its mobile commerce efforts. “We have more data on mobile, the location-based data and buyer behavior data. So that made us believe that the value generated through the mobile platform could be very significant and could be higher. And eventually, that will drive the mobile monetization [and the take rate].”

While Zhang will officially take over as CEO on May 10, he gave an outlook toward Alibaba’s future, which included comments about logistical infrastructures and Alibaba’s mobile GMV growth expectations. Key highlights that he pointed toward include active buyers that grew especially well in rural areas, he said. He also spoke about Alibaba’s mobile Taobao app, which also had impressive growth.

“We made a big push for the Mobile Taobao App this year, and it was very successful. Our mobile GMV grew 212 percent in fiscal 2015, driven by incredible net adds of 126 million mobile users,” said Zhang, who also continued his comments later to Alibaba’s cross-border commerce growth via Tmall, saying that the marketplace “captured consumer mind share as a source of high-quality products, and we attracted major global brands and retailers to our platform. We also established a strong cross-border logistics infrastructure.”

He also spoke toward one of Alibaba’s other successful mobile platforms, its Taobao mobile app, which currently is on the same app as Tmall, but Zhang said the company realized that Tmall warrants its own app, which the company is working on developing. Because consumers had to go into the Taobao mobile app to get the the Tmall section, Alibaba realized the two would be best as two separate shopping apps.

Zhang said that more and more merchants are investing in their mobile options because of Alibaba’s mobile growth shift where consumers are searching for products, but it was also noted that Alibaba sees PC and mobile integrated into its marketplaces as one business strategy. His comments were backed up by Wu regarding observations of how consumers shop on Alibaba’s marketplaces. While mobile engagement continues to be high on PCs, they are seeing more ordering being converted via mobile.

“People, they’re surfing PC screens to put the products in their shopping carts and they confirm orders on mobile, that’s just become very common,” Wu said. “So these two channels to us, they are really serving different consumers in one marketplace. So for us, overall GMV growth, overall revenue growth, that’s what represents the business world, rather than just separately seeing each PC and mobile business.”

While Alibaba has been ahead of the curve with its mobile strategies, including its mobile payment apps, if its recent surge in mobile GMV and mobile commerce is an indication of where the U.S. eCommerce mobile marketplace is headed, mobile commerce will be a focus for a lot more eCommerce giants in the future.

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