On February 24, Alibaba Group released its fiscal 2022 third quarter financial report (Note: Alibaba's fiscal year is out of sync with the calendar year, starting on April 1 of each year and ending on March 31 of the following year). This is the first financial report after the major adjustment of Alibaba's organizational structure, and it is also a financial report covering such a big promotion node as Double 11.
Let's look at three important indicators:
Number of users: According to the financial report, as of December 31, 2021, the number of annual active consumers (AACs) in Alibaba's ecosystem reached 1.28 billion, an increase of 43 million in a single quarter. Among them, consumers in the Chinese market grew net by 26 million to 979 million in a single quarter. It is basically close to achieving the goal of "serving more than 1 billion consumer customers in China".
Profit: During the quarter, net profit was 19.224 billion yuan (about $3.017 billion), down 75% year-on-year. Non-GAAP net profit was 44.624 billion yuan ($9.074 billion), down 25% year-on-year. As for the reasons for the decline in profits, Alibaba gave reasons such as the impairment of goodwill in the digital media and entertainment sectors and the fair price changes of the equity investments held by the company.
Revenue: During the quarter, Alibaba's revenue was 242.580 billion yuan (about $38.066 billion), an increase of 10% year-on-year. Among them, China Commercial is the main contributor to revenue, with revenue of 172.226 billion yuan, an increase of only 7% year-on-year, and the revenue contribution ratio is 71%. And it is worth noting that among China's commercial revenues, customer management, that is, advertising and commission revenue, was 100.089 billion yuan, a negative year-on-year growth of 1% - unprecedented.
There are several reasons for this:
First of all, macro consumption is weak, and consumers have tightened their money bags under the epidemic. According to data released by the National Bureau of Statistics on the macro situation, the growth of total retail sales in December was only 3%. With Alibaba's "jianghu status", its performance is to some extent a reflection of the consumption boom.
Second, Alibaba took the initiative. That is, "the increase in investment in key strategic areas that are demonstrating solid business growth, as well as initiatives to support merchants, increased year-on-year in key strategic areas within the commercial segment, such as Taote, Local Life Services, Community Business Platform and Lazada." ”
Again, the impact of the race. Alibaba's e-commerce business is basically a platform model, which is essentially a "traffic trafficker", buying traffic externally and selling it internally through bidding rankings and other ways. However, platforms such as short videos now occupy user time like a black hole. Not only that, these short video platforms have explored e-commerce models in order to achieve traffic closed loops.
Just a day before Alibaba released its financial report, Kuaishou E-commerce announced that due to the change in the cooperation agreement between the third-party e-commerce platform and Kuaishou, from 0:00 on March 1, 2022, Taobao Alliance product links cannot publish product and service links in shopping carts, short video shopping carts, and business detail pages in the live broadcast room. JD Alliance cannot publish product and service links in the shopping cart of the live broadcast room, but it can publish product and service links in short videos, business detail pages, etc.
A year and a half ago, Douyin had already cut off the external links of third-party platforms, and earlier it was also trying to build its own electronic face sheet system. Not only that, recently Douyin is also improving the inclination of e-commerce and other sections, and the updated version of the Douyin APP shows that it has set aside the mall, planting grass and other sections, and vigorously promoting the Douyin mall. In addition, it can also be seen that the commodity categories of platforms such as Douyin e-commerce are also more overlapping with the Tao system, such as clothing and beauty.
Correspondingly, JD.com, the old rival of Tao's e-commerce, has been relatively little affected, whether because of self-built or category reasons. For example, in response to the news of Kuaishou's "broken chain", Jingdong responded that Jingdong and Kuaishou e-commerce live broadcasting is more based on cooperation at the supply chain level, and this adjustment has almost no impact on Jingdong.
How to deal with it? According to the available information, Alibaba has at least prescribed the following "prescriptions":
1. Increase self-operation
Previously, Alibaba has already had a layout, such as Gaoxin Retail, Hema and Maochao. According to the financial report, Alibaba's "direct and other" revenue under Alibaba's retail business in China during the quarter was RMB67,906 million, an increase of 21% compared with the same period in 2020. The increase was mainly due to revenue from direct operations including Gaoxin Retail, Hema and Tmall Supermarket.
Earlier, LatePost reported that Alibaba's B2C retail business group will open a Tmall self-operated flagship store around big brands, first from the 3C category, and will be officially launched through the mobile Tmall App revision in the near future, when the App will be renamed "Cat Share". However, the relevant person in charge of Alibaba China's digital business sector responded that the Tmall App will not change its name, and Cat Sharing is only an exploration project in the Tmall App. Tmall's self-priming is simply impossible and unnecessary.
Even so, logistics referents have noticed that "Cat Sharing" has been shyly answered online. Logistics references found that last week, the mobile Tmall App has been updated to version 12.0.0, officially launched the "Cat Enjoy self-operated" service. However, compared to the special category entrance for "Cat Sharing" at the beginning, it seems that it can only be discovered through search.
Whether the increase in self-operation and platform merchants have a positive competition is obviously a topic of concern to the outside world. In this regard, in the analyst conference call after the earnings report, Alibaba executives responded: Regarding direct operation and platform model, Ali has no preference, as long as it can serve consumer demand, and user interests are first. From the perspective of merchants and customers, whether it is direct operation or platform, we are to help merchants sell products, as well as promote brands and connect users. Direct operation is not in the user and business directly erected a wall, so that the goods with efficient and flexible prices to reach the hands of users, in the process of this service, we provide merchants with business across multiple scenarios, platform and direct operation, national and local, far field as well as brand direct operation, channel direct operation and so on.
2. Look for increments
Just one day after the release of Alibaba's financial report, the Statistical Report on the Development of China's Internet Network was released. According to the report, as of December 2021, the number of mainland Netizens reached 1.032 billion, an increase of 42.96 million over December 2020, and the Internet penetration rate reached 73.0%. It can be said that the dividends brought by the population base to the growth of the Internet are gradually decreasing. As Alibaba executives mentioned, "We have 1 billion high-quality AAC users, and we believe we have basically covered the vast majority of consumers with purchasing power in China." "Even so, where is the increment?" Going out to sea and sinking.
According to the financial report, Alibaba's consumers in overseas markets exceeded 300 million for the first time. It is reported that Ali's international e-commerce sector includes Lazada, AliExpress, Trendyol and Daraz, with an overall revenue growth rate of 18%. The year-on-year growth rate of orders for the entire international business was 25%, and especially Lazada, the order growth rate was as high as 52% year-on-year. In addition, it can be seen that Jiang Fan is also in charge of the overseas digital business sector.
Facing the sinking market, Alibaba launched Taote and Taocai cuisine. At the end of the quarter, Taote AAC reached 280 million, a net increase of 39 million in a single quarter, payment orders increased by more than 100% year-on-year, and Taocaicai's quarterly GMV also increased by 30% month-on-month. They also took on the task of bringing Alila to life. "Taote has gained a large number of new users for our Retail business in China", "In the AAC of Taocai's business, more than 50% of users are buying fresh products on our platform for the first time." ”
3. Intensive cultivation
"The low-hanging fruit is gone", so I have to spend more energy to improve the quality. For example, the quality of development, taking Taote and Taocaicai as an example, Alibaba executives said, "In the future, we will pay more attention to the quality of the two businesses, and it is expected that future losses will gradually narrow." ”
Another example is the quality of service. When the growth of the number of users slows down, the focus of improving GMV falls on improving high user stickiness and purchase frequency. As Alibaba executives point out: "The focus of the future will shift from user growth to user retention and ARPU growth." ”
User experience is key. Taking Cat Sharing as an example, it is actually to improve the user experience. According to the introduction, the "Cat Enjoy Self-operated" service has set up an official professional procurement team, selected the world's authentic goods, provided after-sales worry-free official customer service, and gradually realized "home delivery to the door, when/next day home" nationwide (except for the user's initiative to request the station to collect and the special delivery address).
In addition to the above parts, Alibaba has also made organizational changes, activating various business segments through "decentralization". Each business segment is also doing its own exploration, like local life services, the financial report shows that the annual active consumers in the quarter (including Ele.me, AutoNavi, etc.) reached about 372 million, a net increase of 17 million in a single quarter, and the order volume increased by 22% year-on-year. Driven by the rapid growth in the number of new merchants and the increase in user penetration, the order volume of the "home" business (including Ele.me and Taoxianda) has increased steadily, with the proportion of orders from non-meals rising. In the quarter, due to the orderly investment in user acquisition and the reduction of delivery costs, Ele.me's unit economic benefits improved year-on-year.
It is worth mentioning that Cainiao Logistics also has a good performance in the quarter. Alibaba's latest earnings report separately disclosed Cainiao's business data for the first time, and Cainiao also reported revenue before offsetting the impact of cross-segment transactions for the first time. The financial report shows that before offsetting the impact of cross-segment transactions, Cainiao's total revenue in the quarter increased by 23% year-on-year to 19.6 billion yuan. This was primarily due to the growth of fulfillment solutions and value-added services provided to china's commercial retail business, as well as the growth in third-party merchant revenue in cross-border and global commerce. During the quarter, 67% of total revenue came from external customers. In addition, its adjusted EBITA lost 92 million yuan, compared with a loss of 241 million yuan in the same period of 2020, and the loss narrowed significantly. This was mainly due to the economies of scale of the business and the improvement of the gross profit margin of the cross-border and international business.
Of course, what is more important is the long-term value of Cainiao and the supporting role of various business segments. Just like the report card shown by Cainiao after The issuance of Alibaba's financial report, it not only goes deep into the consumer Internet, but also develops the industrial Internet. It is both domestic and foreign, but also deep into the end. After years of development, the rookie who plays the "self-operated" brand is now Alibaba's multi-business development engine.
"Now there is also the ability of the production warehouse under Taote to land allocation, as well as cross-border logistics capabilities, follow-up cross-border B2B also has a lot of space, we hope that Cainiao has the ability to serve our various businesses, but also the ability to serve other customers", "The construction of logistics network is the focus of our globalization strategy, is the basis of cross-border and local integrated product supply, and is the support of high-quality consumer experience." At present, through the business scenarios provided by Lazada, AliExpress and Trendyol, Cainiao has formed logistics capabilities in Southeast Asia and Europe. We will continue to invest in it as a focus of our globalization strategy in the future. ”
Of course, the quality of logistics services is also reflected in the need to improve the service experience mentioned above. In addition to the launch of Cat Share, the Tmall platform has also revised the "Tmall Home Delivery Service Specification" recently, and intends to increase the home delivery service guarantee provided by Cainiao Station.
And this can also better understand why the layout of more to buy vegetables on behalf of the collection, not to mention the previous data, services rely on competition, let alone the current, with the reform of cainiao station in terms of home delivery, when the packages of Tao and Pinduoduo have arrived at the station, different policies, different management intensity, service quality may naturally be different. Looking forward to the next stage, the station is the entrance to traffic and link users, the center of community life services, and the site that undertakes community group buying is also a place to pick vegetables and buy more vegetables.
The counterattack of the rookie station is also reasonable, after all, who wants to make a wedding dress for others?