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In May 2024, Alibaba announced its unaudited results for the quarter ended March 31, 2024 and the fiscal year ended March 31, 2024.
In the past financial quarter, Alibaba International Digital Commerce Group (“Alibaba International”) reported a significant surge in revenue, marking a 45% year-over-year increase to RMB 27,448 million (US$3,802 million). A key driver of this robust performance was the expansion of Alibaba International’s cross-border operations, to which AliExpress’ Choice service is contributing significantly.
“Alibaba International recognises the vast potential for further improvement in our operations. Our commitment is to drive quality growth by delivering superior product offerings and services that exceed our customers’ expectations,” Fan Jiang, CEO of Alibaba International, stated at the conference call.
Among Alibaba Group’s diverse businesses, Alibaba International has posted the fastest quarterly and annual revenue growth rates. This performance also marks the seventh consecutive quarter where the company has exceeded growth expectations, a testament to its robust business strategy and adaptability.
Business Model and Supply Chain Improvements
Alibaba International’s impressive growth can be attributed to the strategic changes in its business model and supply chain in the past quarter.
The standout performer has been the AliExpress Choice service. It offers competitive prices and reliable logistics, which has significantly improved the shopping experience and led to a surge in orders. By April 2024, orders from the AliExpress Choice business accounted for over 70% of the total orders on AliExpress.
AliExpress launched the Choice service in March 2023, followed by a 5-day and 10-day global delivery scheme, now available in over 10 countries across Europe, the Americas and Asia. The completion rates of the mentioned 5-day and 10-day delivery have doubled year-over-year in the quarter ended March 31, 2024. In certain regions like Belgium, the Netherlands, Spain, and the UK, the Choice service even promises delivery within just five days. As of December 2023, all Choice products come with free returns in over 20 markets, and an on-time delivery guarantee is offered in 23 markets.
According to Jiang, the AliExpress Choice model currently focuses on lightweight and small items, which are better suited for cross-border operations. However, AliExpress is also actively exploring new supply chain strategies, including the adoption of sea freight for shipping heavier goods to markets such as South Korea.
Recently, AliExpress has introduced its large items category, covering home furniture, home decorations and other bulky products. This move is aimed at diversifying the platform’s product range and meeting the evolving needs of its customers. To promote this new category, AliExpress has launched a Home and Furniture Festival in mid-May, not only spotlighting the new product range but also promoting these items with special discount offers.
Regarding logistics, in the past quarter, Alibaba’s logistic arm Cainiao’s revenue increased by 30% year-on-year to RMB24,557 million (US$3,401 million). The revenue from cross-border logistics fulfilment services supporting AliExpress largely drove Cainiao’s quarterly revenue growth. Within the quarter, Cainiao has expanded its high-quality logistics services with a delivery time of 5 to 10 days to four additional countries, bringing the total coverage to 14 countries.
While the profitability of the AliExpress Choice model is still catching up with the traditional platform model, Alibaba International is working hard to improve its efficiency. As the new model stabilises, the platform’s focus is shifting towards enhancing the efficiency of the business model while maintaining its growth trajectory.
Product Technology Innovation
Alibaba International’s localisation strategy involves tailoring product offerings to regional preferences, enhancing language support for improved communication, and optimising logistics and delivery processes to match local infrastructural conditions. This approach goes beyond geographical adaptation and emphasises understanding and fulfilling the unique needs of different markets.
Among others, AI-powered tools are becoming increasingly instrumental in enhancing various aspects of the platform. For example, AI is now leveraged in customer service to provide quick and precise responses, and is also used to optimise product details, ensuring that product descriptions are clear, comprehensive, and user-friendly. AI also plays a significant role in improving the accuracy of multi-language search recommendations. With the use of advanced algorithms and machine learning techniques, Alibaba International’s various platforms can provide more precise and relevant search results.
Furthermore, the adoption of AI services by small and medium-sized enterprises (SMEs) on Alibaba‘s global business-to-business (B2B) e-commerce platform, Alibaba.com, has seen a remarkable increase. About 17,000 SMEs have subscribed to the AI Smart Assistant, an innovative tool designed to streamline business operations. This AI-powered service assists with product listing, order management, customer service, and other operational areas, thereby enhancing business efficiency and effectiveness.
The impact of AI on product listing has been particularly notable, with millions of products listed on the platform through AI. This has led to a significant 37% increase in AI-optimised product search volume, demonstrating the transformative potential of AI in boosting business operations and growth for SMEs.
Increased Investment in Key Markets
Alibaba International’s investment approach is centred around providing a diverse range of products and quality services. The aim is to foster sustainable growth and improve operational efficiency. Alibaba International is also working towards reducing losses in certain business segments to ensure that investments are utilised more efficiently, thereby facilitating expansion in various global markets.
An important part of Alibaba International’s investment plan is its focus on emerging markets, especially in the Middle East. As mentioned by CEO Fan Jiang at the conference call, “Last quarter, we made substantial investment in emerging markets, particularly in the Middle East.” This strategy is part of Alibaba International’s broader plan to take advantage of the opportunities these markets present.
Trendyol, the Turkish e-commerce platform which is now part of Alibaba International, is another example of the company’s strategic focus on emerging markets. Through active investment in its cross-border business, particularly to expand its product offerings and to provide speedy and reliable delivery, Trendyol continues to achieve double-digit order growth, expanding beyond Türkiye and Europe to the Gulf region, and has become one of the most downloaded shopping apps in the Gulf region.
Future Prospects
Alibaba International’s future prospects are shaped by a series of strategic initiatives aimed at expanding its product portfolio, fostering partnerships, and enhancing its global visibility.
A key aspect of these strategies is its collaboration with celebrities and influencers in different regions. In March, AliExpress partnered with influencers in the UK to bring livestream shopping to the market, primarily focusing on the fashion category. In the Middle East, Alibaba International has enlisted famous Saudi footballers Salem Al Dawsari and Feras Al Brikan as brand ambassadors. In South Korea, the company has appointed renowned actress Tang Wei as the brand ambassador for AliExpress. These notable moves underscore Alibaba International’s recognition of the importance of joining hands with local celebrities to enhance brand awareness and connect with customers in the respective regions.
Alibaba International is also harnessing the power of major sporting events to increase its brand visibility. The company is ramping up its marketing efforts for UEFA Euro 2024TM, scheduled to take place from June 14th to July 14th. Following the official announcement of its sponsorship in late March, its AliExpress platform is expected to launch a series of consumer-interactive content and intensify its promotional efforts. This strategy is aimed at attracting new customers, increasing interaction with existing consumers, driving app traffic, and subsequently boosting platform sales.
Following UEFA Euro 2024TM, the Olympics in July presents another golden opportunity for AliExpress, as it is one of the top sponsors. This high-profile event, coupled with the momentum from UEFA Euro 2024TM, is expected to elevate the e-commerce platform to new heights.
AliExpress’ brand-building efforts have already begun to bear fruit. The platform has become the second most-visited e-commerce site in Spain since late 2023, showing the effectiveness of its market penetration strategies. In South Korea, Alibaba has managed to double its monthly active user base on a year-over-year basis, further demonstrating its growing influence in the global e-commerce market.
“Concurrently, we will concentrate on enhancing operational efficiency. This includes an ongoing commitment to minimise losses in certain business sectors, thereby ensuring optimal utilisation of our investments. With these efficient investments, we are poised to continue our active expansion across diverse global markets, demonstrating our unwavering commitment to growth and customer satisfaction,” underlined Alibaba International CEO Fan Jiang.
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