An Overview of Alibaba’s Commerce Business
Other commerce sales up 790%
In fiscal 1Q18, Alibaba’s Commerce segment, which it reports as Core Commerce, supplied 86% of the company’s total revenues. China’s commerce retail revenues jumped 57% to $5.4 billion, while China’s commerce wholesale revenues rose 30% to $242.0 million.
Revenues from Alibaba’s International Commerce Retail and International Commerce Wholesale segments totaled $389 million and $242 million, implying growth of 136% and 12%, respectively. Alibaba reports unspecified commerce sales as Others, with revenues of $63 million, a 790% increase.
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Increased merchant spending
The chart above shows the components of Alibaba’s Core Commerce segment and their contributions to the company’s top line. Increases in the number of paying merchants and average spending per merchant bolstered the growth in Alibaba’s China Commerce business. The company revealed that paying merchants on its China retail marketplaces reached a historical high in fiscal 1Q18.
Catalyst behind commerce gains
Why are merchants flocking to Alibaba and spending more on its marketplaces? Alibaba’s growing merchant appeal has resulted from leveraged technology that can provide merchants with valuable consumer insights, leading to a better return on investment.
As a result, Alibaba’s Customer Management Service business, which the company previously reported as its Online Marketing Service business, was the main force behind its commerce revenue growth in the most recent quarter.
As Alibaba becomes more competitive with JD.com (JD), Amazon (AMZN), eBay (EBAY), and Walmart (WMT) in the e-commerce sector, it is looking for new ways to garner revenues from its marketplaces. e-Commerce providers have traditionally relied on taking a cut of sales that take place on their platforms.