How will international trade contribute to Alibaba’s revenue growth?


Ali Baba has experienced strong revenue growth across all segments over the past few years. While the company has continued to grow organically in most of the businesses in which it operates, acquisitions have also contributed to the growth in the company’s top line. In recent years, Alibaba acquired Lazada to increase revenue from international business (especially international retail), Youku Tudou online video streaming platform for its digital media and entertainment segment, Cainiao for global logistics, Hema supermarkets to stimulate New Retail (national trade) and more recently food delivery services.

We expect the trend to continue in the years to come and predict that Alibaba will achieve 30-35% annual revenue growth by the end of the decade, with international trade revenue increasing by more than 50% per year. year during the same period. We forecast that net revenues will grow from $ 40 billion in fiscal 2018 to nearly $ 70 billion by fiscal year 20, with international trade revenues rising from $ 3.3 billion to $ 8 billion. $ 1 billion over the same period. As a result, the segment is expected to contribute around 16% of Alibaba’s overall revenue growth over the same period. we have summarized our expectations for Alibaba’s international trade revenue growth in fiscal 2019 and fiscal 20 on a interactive dashboard for Alibaba international trade segment. Below, we take a look at the top revenue drivers for this segment.

Factors driving the growth of the segment

Alibaba classifies its international trade revenues into international retail and international wholesale income streams. International wholesale includes revenue generated from sales on and membership fees and value-added services provided by the company. International retail mainly includes revenue from the sale of products on and Lazada. The company has a strong presence in the e-commerce market in China, with nearly 60% share of the internal market. In addition, Alibaba also has a significant presence in international markets in Asia, Europe and Latin America.

Alibaba’s presence in retail e-commerce in Asia was further strengthened with the addition of Singapore-based e-commerce business Lazada in 2016. Last year, the company increased its stake in Lazada by 51 % to 83%. The acquisition of Lazada gives Alibaba access to a huge potential customer base of 560 million, of which the total number of internet users currently stands at 200 million. In addition, there is currently no clear market leader in the area of ​​e-commerce in the region. Likewise, Alibaba invested around $ 200 million in Indian e-commerce company Snapdeal in 2015 and an additional $ 200 million in another Indian e-commerce company. PayTM in 2017. India is going to be a key market for all major players as Amazon pledged to invest $ 2 billion in India and Walmart acquired a controlling stake in Flipkart for $ 16 billion earlier this year.

Thanks to Alibaba’s efforts to expand its retail business into international markets, the company’s international retail revenue grew from $ 340 million in fiscal 2016 to $ 2.3 billion in Fiscal 2018. We expect the company to experience high double-digit growth in Fiscal 2019 and Fiscal 20, with revenues reaching over $ 6.5 billion in ‘by fiscal year 20. On the other hand, international wholesale revenues have grown by around 10% per year in recent years. We expect this trend to continue, with revenues expected to grow from $ 1.1 billion in FY18 to $ 1.4 billion by FY20. As a result, we expect Combined international trade revenues will grow by just over 50% per year, from $ 3.3 billion in fiscal 2018 to just over $ 8 billion by fiscal year 20. If you do not agree with our forecasts, you can modify these figures on our Interactive revenue contributor dashboard for Alibaba and make your own estimates.

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