Mobile Now Makes Up More Than Half of Alibaba’s China Sales

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Mobile Now Makes Up More Than Half of Alibaba’s China Sales

(This story was originally published by Internet Retailer)

More than half of all revenue generated in China for Alibaba Group Holding Ltd. came from mobile devices during its most recent quarter.

The e-commerce giant reported revenue generated from mobile devices of 7.987 billion yuan ($1.250 billion), a figure that represents 50.8% of the company’s overall revenue generated by its China commerce retail business of 15.712 billion yuan ($2.459 billion) during the quarter. Mobile sales for the quarter also represent growth of 225.5% from 2.454 billion yuan ($384.032 million) during the same period last year. Mobile accounted for 39.5% of Alibaba’s overall 20.245 billion yuan ($3.168 billion) during the quarter.

A sharp uptick in the number of active users on the company’s mobile apps helped fuel mobile growth. Executive vice chairman Joseph Tsai told analysts on the company’s fiscal Q1 2016 earnings call that the overall number of active users on mobile apps grew 63% year over year to 307 million.

That growth has Alibaba executives feeling optimistic.

“We are having tremendous success in attracting consumers to transact on our mobile apps and also in monetizing that mobile traffic,” CEO Daniel Zhang told analysts on the call, according to a transcript from Seeking Alpha. “Mobile GMV (gross merchandise value) in the June quarter was $60 billion, which represented 55% of total GMV. We expect mobile GMV as a percentage of total GMV to keep growing, as we continue to improve the user experience on our mobile apps.”

Overall revenue growth slowed during the quarter for Alibaba compared with previous quarters, with the 20.245 billion yuan total representing 28.4% year-over-year growth from 15.771 billion yuan ($2.468 billion) during the same time last year. That growth was driven by a 31.5% year-over-year increase in the number of active buyers, to 367 million from 279 million this time last year.

Active buyers purchase “more than 50 tons a year on our platforms, which illustrates the strengths of our ecosystem,” Zhang told analysts.

On Monday, Alibaba acquired a 19.99% stake in electronics retailer Suning Commerce Ltd., No. 3 in the Internet Retailer 2015 China 500, for 28.3 billion yuan ($4.429 billion) in what is Alibaba’s largest deal to date. As part of the deal, Suning will establish a presence on Alibaba’s

Executives told analysts on the call that the deal has the potential to greatly benefit both parties. “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,” Tsai said.

“[Suning] opening a Tmall operation will bring us a large selection of the products and the premium services,” Zhang added. “We think this is good for the consumers, and this will bring a lot of additional traffic and demand to our marketplaces [that] will ultimately be shared by the merchants who already are on our platform. Also, we do believe that with the strong supply chain capability, we can work well with Suning to leverage this supply chain expertise and get better supply on our platform, which will be ultimately benefit our consumers.”

For the quarter ended June 30, Alibaba also reported:

  • The gross merchandise value of items bought on China retail marketplaces was 673.198 billion yuan ($1.09 billion), up 34.4% from a year ago.
  • Mobile gross merchandise value of items bought on mobile devices in China retail marketplaces of 370.578 billion yuan ($60 billion), up 125.4%.
  • Net income of 30.816 billion yuan ($4.97 billion), up 148% from Q1 2015.

Matt Lindner is an associate editor for Internet Retailer.

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