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After years of diversification, Alibaba is still an e-commerce company

Written by Song Jingli Published on   2 mins read

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Alibaba’s core commerce businesses still account for almost 90% of overall revenue.

Alibaba has been exploring new territories beyond its core commerce business. But if you look back on its financial reports from the last four years, it shows that there’s still a long way to go before these new business turn into real moneymakers.

Alibaba made a total revenue of RMB 376.8 billion (USD 56.2 billion) in the 2019 fiscal year that ended on March 31, up 51% year-on-year, its annual report filed on Thursday shows.

Its revenue from core commerce, which is made up of retail and wholesale at home and abroad, last-mile logistics service provided via its Cainiao network and on-demand local services provided via Ele.me, reached RMB 323.4 (USD48.2 billion), accounting for 86% of its entire revenue. Revenue in this sector grew 51% year-on-year.

Alibaba’s cloud computing business generated RMB 24.7 billion (USD 3.7 billion), an increase of 84% year-on-year. However, even with so fast growth, this segment only accounted for 7% of the total revenue.

Its digital media and entertainment arm generated RMB 24 billion (USD 3.6 billion) in revenue, up by 23% year-on-year, recording the slowest growth of all segments. It made up 6% of the total revenue.

Its innovation initiatives and others, primarily including smart speaker Tmall Genie and mapping service, generated RMB 4.7 billion (USD 695 million), accounting for only 1% of the entire revenue. Revenue in this segment grew 42% year-on-year.

In 2018, its core commerce business also accounted for 86% of its entire revenue of RMB 250.3 billion. In 2017, that percentage was 85%. In 2016, when Alibaba wasn’t listing the digital media and entertainment revenue as a separate entry, its core business accounted for as high as 91% of its entire revenue.

Alibaba’s core businesses aren’t just revenue drivers, they’re also bringing in the profits.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITA) for its core commerce segment increased by 19% to RMB 136.2 billion (USD 20.3 billion) in the 2019 fiscal year.

Adjusted EBITA for its cloud computing, digital media and entertainment, and innovation initiatives and others were all a loss.

In the fiscal year 2018, commerce was also the only profitable segment.

Contact the writer at [email protected]

Editor: Nadine Freischlad

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