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Alibaba expects marketplaces to drive faster growth

Chinese e-commerce operator Alibaba Group Holding Ltd. on June 8 said it expects revenue in fiscal 2018 to increase at a faster pace than market expectations through sales growth in its marketplace businesses.

Hangzhou, China-based Alibaba said it expects revenue to grow between 45% and 49% in the fiscal year ending March 2018, above the 35% average forecast by a consensus of analysts surveyed by Bloomberg. Alibaba's growth rate estimate implies a revenue goal of between 229.5 billion Chinese yuan and 235.83 billion yuan, up from 158.28 billion yuan reported for fiscal 2017.

The target was unveiled by Alibaba CFO Maggie Wu, who spoke to investors at Alibaba Xixi headquarters in Hangzhou.

Achieving that revenue goal would mean that the operator of Taobao Marketplace and wholesale sites and Tmall would maintain its track record of expanding revenue by more than 30% every year since it listed its shares on the New York Stock Exchange in 2014.

Revenue grew 45.1% in fiscal 2015, 32.7% in fiscal 2016 and 56.5% in fiscal 2017. Wu noted that excluding newly consolidated businesses Youku Tudou and Lazada, the growth rate for fiscal 2017 was between 44% and 45%.

"We have that confidence based on the data, the technology we have, the whole integrated business we have built, we're going to achieve that," Wu said at the conference. "By having such a big base, a larger base, we continue to accelerate our revenue growth."

In addition to its commerce businesses, Alibaba is involved in cloud computing, digital media and entertainment, and other operations.

For its China retail business, Alibaba reiterated its goal of achieving annual gross merchandise volume, or GMV, of $1 trillion, by fiscal 2020.

The company is increasingly benefiting from transactions through mobile devices, Wu said. In fiscal 2017, mobile represented 79% of GMV and 80% of revenue, while the monetization rate of mobile transactions exceeded that of personal computers for the first time — 3.04% for mobile and 2.97% for PCs.

"Mobile provides broader user base, higher user engagement and more data," Wu said to explain why mobile was playing a greater role than PCs.

Wu added that revenue growth would not necessarily lead to profit growth given that the company was willing to sacrifice profit margin for investments.

"We're willing to take a couple of percentage of our margin we've generated to reinvest in the business. We are willing to invest that money into expansion of consumer base, keep improving consumer experience, quality consumption, and to make it very clear, we are going to invest that to gain [business to consumer] market share."

As of June 7, US1$ was equivalent to 6.80 yuan.