Alibaba’s Investor Day showcase all the different business segments to stir up the interest of potential investors. In this article, we will only look at the different businesses of Alibaba. It is the business ecosystem that makes Alibaba interesting. We can study whether the business has an economic moat or competitive edge over its competitors.
Taobao, Tmall and Alimama
Mobile monthly active users (MAUs) on the China Retail Marketplaces have increased by 65 million in September 2021 year on year. Annual active consumers (AACs) will be increased by 106 million in Q2 FY 22 year on year. The consumer segments are divided into:
– Young Consumers (15 – 24 years old)
– Core Consumers (25-44 years old)
– Older Consumers (>45 years old)
The AACs retention rate for Core Consumers is more than 90% between September 2020 to September 2021. The Older Consumers are growing 35% year on year. The population penetration for Young Consumers has achieved more than 90%. There is high ARPU growth in the Young Consumers segment.
The Core Consumers have high purchasing power and the demand for a better quality of life. They have a higher ARPU of 1.4x compared to others. They demand luxury goods, premium services, and new launches of products. ARPU of 88VIP members is 8 times compared to the average for the last twelve months ended September 2021. 88VIP and Taobao Pass are paid membership. The number of paid membership has increased by more than 20 million in October 2021.
The Home Decor category has a high online growth rate but still relatively lower online penetration. Home Decor offers both online experience innovation, coupled with delivery and installation services. Its 3D Showroom Content has increased by 9 times year on year in September 2021. Daily GMV increased by 200%.
They are upgrading consumer experience to improve long-term value creation. They have a 1+X app strategy. In China, they have a preference to do everything in a single app. Alibaba uses Taobao app coupled with Idle Fish and DianTao apps to increase MAU retention. They have sellers on Idle Fish but are not Taobao store owners. DianTao provides live streaming which increases more spending. The annual viewers of Taobao live increased by 62 million from Q2 FY21 to Q2 FY22. The average spending increased by 30% from Q2 FY21 to Q2 FY22.
Taobao app provides interactive entertainment to engage the customers. For the month of September 2021, there are average daily paid orders of 1 million. The annual advertising revenue is more than RMB 10 billion for the period ended in September 2021. The engagement helps the average daily time spent per user increase by 50% year-on-year.
Alibaba has a wide coverage through its commerce app, coupled with different businesses to create an ecosystem. This created the platform for merchants to reach out to Alibaba’s users. Alibaba has an optimized omnichannel advertising platform called UniDesk. Merchant is spending 5x more advertising through UniDesk in H1 FY22 compared to H1 FY21.
Alimama upgraded its advertising platform called Wan Xiang Tai “万相台”. It has shifted from Product-based to Business Target driven through AI-based one-stop optimization. The ROI on digital marketing has increased by 30%. This is measured through GMV generated per dollar of advertising spending.
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