Alibaba’s key revenue segments
This series will focus on Alibaba (BABA) and Amazon (AMZN) and compare their revenues, costs of revenue, gross profits, operating expenses, operating incomes, net incomes, and valuations. We’ll start with a revenue comparison and analysis.
Alibaba’s (BABA) revenue has grown at a three-year CAGR (compound annual growth rate) of 49% to 250.3 billion yuan ($39.9 billion) in fiscal year ended March 31, 2018. Its revenue improved 58% in 2018 from 45% in 2015. Core commerce constituted 91% of its revenue in 2015 and 2016 and 85%–86% in 2017 and 2018.
Its cloud computing, digital media and entertainment, and innovation initiatives segments generated the rest of its revenue. China commerce, which includes China’s retail and wholesale commerce, accounted for 82% of Alibaba’s revenue in 2015 compared to 74% in 2018.
Alibaba’s revenue improved 61% to 80.9 billion yuan ($12.2 billion) in the quarter ended June 30, 2018. Core commerce made up 86% of its revenue, while cloud computing, digital media and entertainment, and innovation initiatives accounted for the rest. China commerce made up 70% of revenue for the period.
A look at Amazon’s major segments
Amazon’s net sales rose at a three-year CAGR of 26% to $177.9 billion in fiscal year ended December 31, 2017. That’s four and a half times Alibaba’s revenue. Amazon’s net sales increased 31% in 2017 from 20% in 2015. Its online stores contributed 77% of net sales in 2014 compared to 61% in 2017.
Third-party seller services, subscription services, and Amazon Web Services (or AWS) provided the rest of its revenue. Its North American segment generated 57% of net sales in 2014 compared to 59%–60% in the following years. The international segment accounted for 38% of net sales in 2014 compared to 32%–33% in the subsequent years. AWS made up the rest of its net sales.
Amazon’s (AMZN) net sales increased 41% in the first half of 2018 to $103.9 billion. Online stores generated 52% of its revenue for the period. Third-party seller services, subscription services, and AWS contributed the rest. Its North American segment contributed 61% of revenue, the international segment accounted for 28%, and AWS accounted for the rest.
How did peer companies perform?
JD.com (JD), Alibaba’s biggest competitor in China’s e-commerce, recorded revenue of 362.3 billion yuan ($55.7 billion) and 222.4 billion yuan ($33.6 billion) in the fiscal year ended December 31, 2017, and the six months ended June 30, 2018, respectively.
Walmart’s (WMT) revenue was $500.3 billion and $250.7 billion in the fiscal year ended January 31, 2018, and the six months ended July 31, 2018, respectively.
Next, let’s compare the revenues for Alibaba and Amazon.