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Why Alibaba’s Monetization Rate Is Trending Upward

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Alibaba is successfully monetizing its user base

Alibaba (BABA) remains successful in driving user growth and engagement by enhancing the user experience, which in turn has been boosting brand marketers’ spending on its platform. Meanwhile, the company is witnessing continued growth in the average spending amount, coupled with an increase in the monetization rate of its active buyers.

Alibaba’s revenue per annual active buyer has seen a continued uptrend. As the chart below shows, the company’s annual China commerce retail revenue per annual active buyer increased to 202 yuan ($30) during the most recent quarter from 171 yuan ($25.7) in 2015. Moreover, Alibaba’s mobile revenue per mobile user also increased to 140 yuan ($21) from 76 yuan ($11.4) in the comparable period last year.

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Mobile monetization rate exceeded PCs

Alibaba’s successful transition to mobile has been reflected in the increase in its mobile take rate, which surpassed the take rate of PCs (personal computers) for the first time.

Notably, the company’s mobile revenue from its China commerce retail business increased by 119% YoY to 17.5 billion yuan (~$2.6 billion) and accounted for 75% of China’s commerce retail revenue. The mobile monetization rate was 2.80% in fiscal 1Q17, surpassing the non-mobile monetization rate of 2.78%.

Mobile uptake remained strong as the company added more social features, thereby enhancing user experience and growth. The mobile segment’s GMV (gross merchandise volume) is also growing rapidly and now accounts for 75% of total GMV transacted in its China retail marketplaces.

Now let’s check in with Alibaba’s analyst recommendations.

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