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A Look at Alibaba’s International Business

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Aug. 1 2017, Updated 9:07 a.m. ET

40% of revenues from international commerce

Alibaba’s (BABA) goal is to generate 40.0% of its revenues from international commerce within the next five years. Looking at the current revenue contribution of Alibaba’s international commerce operation, it seems clear that the company has a lot of ground to cover. 

Alibaba’s total commerce revenues rose 47.0% YoY (year-over-year) to $4.6 billion in fiscal 4Q17, its March quarter, comprising 82.0% of its overall revenues in the quarter.

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International contributes a sliver of Alibaba’s revenues

In fiscal 4Q17, Alibaba’s international commerce retail business generated $353.0 million in revenues, up 312.0% YoY. Its international commerce wholesale business generated $219.0 million in revenues, which rose a modest 8% YoY.

Combined, Alibaba generated $572.0 million in revenues from international commerce, implying that the segment contributed about 10% of the company’s overall revenues in the quarter. That shows that Alibaba is 30.0% short of its target to generate 40.0% of revenues from international commerce.

The chart above contrasts Alibaba’s international commerce revenues for the most recent quarter with fiscal 4Q16.

Pursuing growth overseas

As China’s e-commerce sector becomes more crowded and the pace of growth slows because competitors like JD.com (JD) are doubling down their efforts, Alibaba is looking abroad to drive new growth. However, competition on the international scene is just as stiff.

As it expands abroad, Alibaba is setting itself up for direct competition against Amazon (AMZN), eBay (EBAY), and Walmart (WMT). Alibaba’s dominance in its domestic market has limited the penetration of these rivals in China (MCHI).

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