Mobile GMV is picking up
Alibaba (BABA) reported a decline in the number of active buyers and its gross merchandise volume (or GMV), as we discussed in the prior part of this series. However, its mobile GMV increased to 55% in the quarter ending June 2015.
Despite China’s (FXI) slowing economy, Alibaba managed strong growth mainly due to its expanding focus on mobile devices. As a result, mobile users account for more than half of Alibaba’s gross merchandise volume. The chart below shows an increase in Alibaba’s mobile GMV penetration from 27% in fiscal 4Q14 to 55% in fiscal 1Q16.
The increase in mobile penetration came from the increase in the number of monthly active users on mobile devices. This number increased from 163 million in fiscal 4Q14 to 307 million in fiscal 1Q16. This increase in Alibaba’s mobile penetration is significant, considering that eBay’s (EBAY) mobile payments transactions constituted only 30% of its overall payment transactions. Amazon (AMZN) doesn’t disclose this metric.
Increasing smartphone penetration aids mobile penetration
The increase in Alibaba’s mobile penetration is also driven by the growing smartphone penetration in China. Of the mobile phones sold in China, 90% are smartphones, according to a report from market research firm Counterpoint. This smartphone penetration in China is even greater than in the US, where penetration stands at 87%, according to the report.
Apple (AAPL) has benefited the most from this smartphone growth in China. The company was surprised by the tremendous growth of the iPhone 6 in China.