In fact — between the executive team and the analysts’ questions — the term “mobile” was rattled off 107 times during the company’s earnings call Wednesday morning. But just how “robust” (as Alibaba’s team phrases it) was its mobile commerce for the quarter?
Well, pretty robust if you look at the numbers. To start, Alibaba hit 307 million monthly active users in the quarter on its mobile commerce apps. To put that into perspective, that’s an 18 million user increase from Alibaba’s March quarter and a whopping 63 percent year-over-year increase. Mobile revenue also hit another noteworthy increase, soaring to roughly $1.25 billion (RMB 8 billion), or a 225 percent increase, YOY.
Mobile revenue accounted for 51 percent of Alibaba’s China commerce retail revenue in the quarter, and the mobile monetization rate jumped 2.16 percent in the quarter. Mobile GMV hit $60 billion and now accounts for 55 percent of total GMV.
But in all of its mobile efforts, there’s one figure that stands out most as demonstrating why Alibaba is committed to being a mobile commerce leader: its same-day grocery delivery efforts. Alibaba recently launched same-day grocery delivery in Beijing and Shanghai, and the results for mobile commerce are worth doing a double take.
Alibaba’s grocery sales in Beijing increased 740 percent in the quarter, which shows the power of how much consumers care for same-day delivery when it comes to grocery. But what’s more is that Alibaba’s grocery orders are 90 percent from mobile devices.
No wonder Alibaba is so focused on driving its mobile commerce platforms — and focused on driving those in a cross-border platform that expands the presence of Alibaba’s marketplaces and its mobile payments affiliate app Alipay. Its mobile domination in the eCommerce market has also made it a top pick for major partnerships, like its recent $4.6 billion investment in Suning, an electronics retailer.
From Online To Offline
Moving back toward its eCommerce efforts, during the call with analysts, Alibaba Executive Vice Chairman Joseph Tsai shared how Alibaba’s efforts with retailers have helped build its omnicommerce focus.
“Consumers can have an in-store experience to try products and enjoy after-sales service, while ordering and making payment and appointments on a mobile device in a seamless offline-to-online experience. Our strength in mobile makes Alibaba the best partner to work with in terms of offline retailers, such as Suning, to develop the omnichannel strategies.”
Taking the reins during his first earnings call as CEO, Daniel Zhang also directed his comments toward mobile commerce and how mobile for Alibaba means much more than just eCommerce. Now, it’s about mobile logistics, cloud computing, mobile Internet services and building upon its local services platforms that consumers can tap into via the power of its mobile capabilities.
“We are having tremendous success in attracting consumers to transact on our mobile apps and also in monetizing that mobile traffic,” Zhang said. “As buyers move to mobile, advertisers are becoming more and more willing to commit advertising dollars to promote their product on mobile, which in turn improves auction pleasure and bidding behavior. We will continue to optimize our P4P services for advertisers and develop more sophisticated tools to help merchants to sell and promote their products on our mobile apps.”
While Alibaba is focused heavily on mobile, it’s also recently bumped up its investments in online-to-offline services to increase its mobile payments presence in stores, instead of just on its marketplaces. In June Alibaba announced its joint venture with Koubei, a local services market, to help grow Alibaba’s plans in the local service sectors. This includes areas like takeout food, restaurants, entertainment, shopping and health care services.
“Users can access these services through either Mobile Taobao App or Alipay Wallet, the mobile wallet app operated by Ant Finance, which enable a closed-loop of online-to-offline interaction between consumers and the physical stores through mobile payment,” Zhang said.
“We believe that combining our leadership position in mobile commerce with Ant Financial’s leadership position in mobile payments will put us in a unique position to capture growth opportunity in this market, which is projected to be over RMB 300 billion [~$47 billion] in GMV in 2015, according to iResearch,” he added.
Alibaba makes an interesting case for how an eCommerce giant has seen a dramatic shift in shoppers turning toward mobile as it now accounts for a majority of its total GMV. That doesn’t mean people aren’t still using computers, but it does give an indication about what the future of commerce may look like.
“We do observe an increasing shift of consumers to mobile. But we still observe that on PC; we still have huge traffic on PC,” Zhang said.
But like most eCommerce trends, what Alibaba is finding is that most consumers are starting their shopping experience on mobile, and then they are likely turning toward the PC to complete that transaction. In some cases, however, Alibaba is seeing the reverse and seeing consumers start on PC and turn to mobile to complete the purchase.
“In terms of efforts on the GMV growth for PC and mobile, we are more focused on the people, the buyer/consumers, rather than just treating this PC/mobile as two separate marketplaces. So people’s behavior is that they could use both. They search and click on mobile, they make get transaction done on PC or vice-versa. So all of our efforts attracting the consumers is mainly related with the improvement of user experience,” Alibaba CFO Maggie Wu said.
Alibaba’s Logistics Focus
Zhang also spoke about Alibaba’s logistics investments, which has paid off for Alibaba through its logistics affiliate, Cainiao, which has helped scale Alibaba’s next-day delivery services. Next-day services are now available in 41 cities and are expected to expand to nine more by the end of the year.
Beyond its delivery efforts and focus on mobile, the other big area Alibaba has focused on — the area that has made most of its headlines in recent months — is its expansion of its cross-border efforts. Zhang also provided a bit of insight into that sector’s growth.
“In recent months, we have made substantial progress in providing international brands access to Chinese consumers shopping on our marketplaces. More and more brands view our Tmall platform as the only eCommerce channel to develop their China business,” Zhang said, pointing specifically toward Alibaba’s partnerships with 12 countries to launch Country Pavilions (curated vertical shopping sites).
While Alibaba presented a major case as to why it continues to dominate in the field of mobile commerce, its specific earnings figures that most analysts care about didn’t quite deliver. Although revenue for the quarter increased 28 percent, year over year, to roughly $3.26 billion, and GMV on its China retail marketplaces increased 34 percent, year over year, to $109 billion, that didn’t seem to be enough for what analysts expected out of the eCommerce giant.
Why Alibaba Still Missed On Earnings
Missing expectations, Alibaba’s stock took a more than 4 percent hit during midday Wednesday and got heavily criticized by major media outlets about its quarterly performance, which was its slowest growth in a three-year period — attributed much to the slowdown of the Chinese economy.
But much like Amazon’s quarterly updates, Alibaba isn’t so focused on the current quarter — instead drawing most of its attention about what’s next for the eCommerce giant.
“We had a strong quarter, and we continued to build the foundations for future growth. We focused our efforts on building healthy GMV growth, delivering the best consumer experience and improving the quality and sustainability of merchants doing business on our marketplaces,” Zhang wrote in the company’s prepared earnings remarks. “We are excited about our top strategic priorities, including internationalization, winning in mobile, expanding our ecosystem from cities to villages and investing in core technologies that will propel our cloud computing business.”