In addition to e-commerce, Ali is actively laying out other Internet businesses: mainly including cloud computing, digital media, Cainiao network, ant gold service and so on. Cloud computing in China belongs to the explosive period, Ali started earlier and has the data and technology advantage, this business has become a new growth point to pull its revenue, the future is expected to achieve greater breakthroughs. In terms of digital media, it mainly relies on two platforms, Youku Tudou and UC Browser, for information distribution; in terms of content, it also continues to make efforts, relying on Ticketmaster as a traffic portal, and laying out the Ali Movie industry. The other two major supports are the logistics ecosystem centered on the Cainiao network and the financial layout centered on the ant gold service.
Branding and personalization*** drive the growth of retail business
In Alibaba's retail business in China, the core two platforms are Taobao and Tmall, which have different modes, and there is a difference in the positioning of "universal Taobao and quality Tmall". In terms of the performance of the two platforms in terms of GMV, Taobao is still the main one, accounting for about 58.5%, providing consumers with more personalized goods and services, and occupying an important position in the long-tail market; in terms of the growth rate of GMV, Tmall is growing faster than Taobao, with the compound growth rate of Tmall in the fiscal year 2015-2017 reaching 35.9%, compared to Taobao's 17.4%. This is related to the overall e-tailing development trend in China. As people's income level rises, users pay more attention to the quality of goods and shopping experience, which provides an opportunity for the rapid expansion of the B2C market, and Tmall continues to bring in offline and international brands to provide consumers with high-quality goods and services under this trend.
Enhanced logistics eco-layout: Rookie network
Rookie provides two types of services: data and technology-based logistics solutions and domestic warehouse management services. Data- and technology-based logistics solutions: Merchants, logistics providers and consumers are connected to each other and logistics information is tracked in real time. Merchants rely on the data and information on the Cainiao network to select logistics service providers, accurately match and optimize delivery routes. Under this model, merchants build their own warehouses and pay packing, shipping and sorting fees for courier companies for the last-mile delivery. As a platform, Cainiao does not need to invest in the heavy assets of warehouses, transportation or last-mile delivery, and the model is lighter. Under the platform model, Cainiao Shouwu integrates the resources of logistics providers and establishes a logistics ecosystem. Domestic warehouse management services: customized warehousing services are provided for above-scale needs as well as specialized needs. In addition, it also cooperates with international logistics companies to provide cross-border logistics services for merchants.
As of March 2017, Cainiao had one***15 courier partners on its network, covering more than 600 cities and 31 provinces in China, with a total distribution workforce of more than 1.8 million employees, and delivered 16.6 billion couriers for the Chinese retail market. Alibaba owns a 47% stake in Cainiao Shaojiao. As an important layout of Ali in logistics, Cainiao network realized operating income of 9.35 billion yuan in 2016, and the compound growth rate of revenue from 2014-2016 was as high as 215.2%, and there is still a large potential for future development.
Alibaba's "new retail" plan
"New retail" puts more emphasis on the consumer scene experience, the seamless connection between online and offline. 2016, Ali has carried out a series of online and offline activities around "new retail". Since 2016, Ali has carried out a series of offline layout around the "new retail", through investment in shares, strategic cooperation and other ways to enter the fresh food, offline department stores, supermarkets and other areas, to open up the online and offline data to improve the user experience.
The online self-supporting business is the core engine that drives total revenue
Jingdong's biggest advantage over its competitors is its self-supporting model. In recent years, Jingdong has gradually opened up its online platform, and the synergistic development of its own business and platform. 2012-2016 data show that online self-supporting business accounted for more than 90% of the total net revenue, and although the proportion of the declining trend, the self-supporting business is still the core engine of the overall growth of the revenue business.
E-commerce: full category force, continue to expand the scale
Jingdong's online sales platform is still mainly self-operated, but the scale of the third-party platform is expanding. As of December 31, 2016, there were more than 120,000 third-party sellers in Jingdong's online marketplace. In recent years, the scale of third-party platforms has been expanding, with GMV increasing from RMB83.2 billion in 2014 to RMB285.9 billion in 2016, playing a strong pulling role in Jingdong's GMV growth.
In terms of categories, the traditional advantageous category of 3C home appliances still maintains high growth, with GMV reaching RMB 327.1 billion in 2016; the transaction scale of other general merchandise categories has gradually expanded, with the transaction scale reaching RMB 330.4 billion as of 2016, overtaking the 3C home appliance category.
Warehousing and logistics: core competitiveness to safeguard consumer experience
Jingdong started to establish and operate its own national logistics infrastructure in 2007, building warehouses and delivery lines to distribute goods for its online retail business. As the online platform opened up, Jingdong also provided delivery services to third-party sellers on the platform and sellers on other platforms, gradually developing into an independent logistics system.
Delivery stations: as of December 31, 2016, Jingdong Logistics had set up 6,906 delivery stations across the country***, covering 7 provinces and 25 cities. Warehouse: as of December 31, 2016, Jingdong *** operated 256 warehouses with a total floor area of about 5.6 million square meters, covering 54 cities, 6606 delivery stations and 2655 counties nationwide. Capacity: as of December 31, 2016, Jingdong provides same-day and next-day delivery in 1,410 counties and cities across China.
Jingdong has been increasing its investment in logistics and warehousing construction, and its warehousing and logistics expenses have been rising, with a year-on-year increase of 50.5% in 2016, and its share of total costs rose to 8.1% from 7.7% in 2015. As of December 31, 2016, Jingdong*** paid approximately RMB4.8 billion (approximately US$700 million) for the acquisition of land use rights, warehouse construction and warehouse equipment purchases. According to Jingdong's financial results, its capital expenditures in 2014, 2015 and 2016 were also primarily expenditures related to expansion of infrastructure, technology platforms, logistics equipment and new office buildings. Warehousing and logistics is the core competitiveness of Jingdong's e-commerce platform to protect the consumer experience.
Development status: active users and consumption frequency growth, driving revenue and profit growth
Vipshop was founded in 2008, after nearly a decade of development, Vipshop has become one of the leaders in China's B2C online shopping market by virtue of the rapid development of its unique "special sale" model. According to the data, Vipshop's total net operating income in the first half of 2017 amounted to 33.47 billion yuan, maintaining a high growth rate of more than 30%. The number of active users and order volume supported the benign growth of Vipshop's revenue. The financial report showed that in Q2 2017, Vipshop's net revenue reached RMB 17.52 billion, up 30.3% year-on-year, order volume reached 84.8 million, up 23.0% year-on-year, and the number of active users reached 28.1 million, up 22.0% year-on-year. Revenue increased faster than the number of active users, the revenue contribution of individual users increased, and user stickiness was further enhanced.
Business Layout: E-commerce, Finance, Logistics "Troika", Broadening Future Imagination Space
In the first half of 2017, Vipshop formally announced that it would spin off its Internet finance business and reorganize its logistics business to create a strategic matrix consisting of three major segments: e-commerce, finance, and logistics, and gradually jumped out of a single e-commerce business model to achieve a multi-faceted, multi-purpose business. The model of the e-commerce business and the realization of multi-business development have broadened the imagination of the future while bringing greater challenges.
E-commerce: a leader in specialty e-commerce, with upgraded quality
Mode: deep discounts, genuine specials. Vipshop focuses on limited-time specials, and by selling y discounted branded goods for a limited time, it creates a rush atmosphere that attracts users to consume. The essential logic of the discount bargain model lies in the mutual cycle of high turnover and low cost of the bargain channel. For the supply side, discount e-commerce higher than other platforms brand exposure and turnover rate, to help suppliers to realize thin profits, while also cleaning up a large number of tailgate inventory; for consumers, the depth of discounts to meet the consumer cost-effective purchase to the brand's demand for goods to achieve a win-win situation. Compared to other integrated and vertical e-commerce platforms, Vipshop has a clear advantage in turnover efficiency.
In terms of categories, Vipshop started with its own apparel, and then gradually expanded into diverse categories such as shoes and bags, cosmetics, sporting goods, and maternal and child products, etc. Between 2014 and 2015, Vipshop invested in vertical e-commerce companies such as Lebee and Spicy Moms, further expanding its development in other areas such as beauty and maternal and child products.
In terms of sourcing, branded tailgate is the most common source of discount retailing due to its natural clearance needs, but in fact, as long as the cost is low enough, new debut, customized underwriting, and private labeling can all be sustainable sources of discounted outlet retailing. In the early days of its establishment, Vipshop's sources of goods were mainly tailgate goods, but with Vipshop's continuous development in the field of e-commerce, the proportion of new products and exclusive products has been increasing, and as early as in the Q2 2016 earnings analysts' conference call, Vipshop had already disclosed that new products of the current season and platform special supply products accounted for 37%. With Vipshop's further upgrading of its brand quality image, customized and free-branded goods are likely to be further enhanced in the future.
In terms of supply chain, in order to further enhance the sale ratio of goods, accurate selection of goods is crucial for the bargain platform. Vipshop has set up a team of 1,000 buyers globally at the early stage of its establishment to guarantee the quality of the selected products through the cultivation and building of the buyer team, and by the end of 2016, the buyer team of Vipshop had reached 1,600 people. In addition, in terms of brand cooperation, Vipshop continues to increase its efforts to attract high-quality brands and merchants around the world, and the number of cooperative brands has exceeded 20,000, including many domestic and foreign famous brands.
Logistics: Continuous investment in infrastructure to speed up logistics fulfillment and distribution
In recent years, Vipshop has invested a lot in the construction of logistics infrastructure. Domestically, Vipshop has established five major logistics and distribution centers across the country, radiating to most regions of the country. In areas where active users gather and the demand for distribution is large, Vipshop has set up additional front warehouses, and as of June 30, 2017, Vipshop had a total warehouse area of 2.2 million square meters, and the total number of front warehouses had increased to 11, with about 27,000 last-kilometer distribution personnel and about 3,600 distribution sites. In addition, Vipshop is also expanding its international warehouse space to help the development of Vipshop's international cross-border e-commerce business. in Q2 2017, 95% of Vipshop's own business was delivered by its own courier team.
The improvement of infrastructure has led to the continuous improvement of Vipshop's logistics fulfillment efficiency, and the fulfillment expense ratio dropped from 16.7% in Q1 2012 to 9.4% in Q2 2017. In the future, as the degree of openness of Pinjun logistics continues to increase, it will turn from a cost center into a profit center and explore more profitability possibilities.
Finance: vigorously develop consumer finance, rapid growth of active users
Vipshop has been laying out its financial business since 2013, and has successively obtained a commercial factoring license, a small loan company license and a third-party payment license. Up to now, Vipshop has realized the financial business layout of "credit+payment+insurance (chips)". In the first half of this year, Vipshop announced that it had split its financial business into independent operations, which on the one hand will help the financial business to obtain a broader growth space outside the parent company's e-commerce platform, and on the other hand will help to enhance the brand value and valuation potential of the financial business.
Vipshop's products mainly include: (1) credit: supply chain finance on the 2B side (Vipshop Loan), and consumer finance on the 2C side (the main product is Vipshop Flower, an installment payment business); (2) financial management, which cooperates with Everbright Funds to provide consumers with money fund products (Vipshop Treasure), and (3) insurance: it cooperates with Guohua Life and New China Life to provide annuity insurance and travel accident insurance. E-commerce platform to carry out consumer finance business has a natural scene and customer advantages, the financial report data show that in 2017 Q2, the number of active users of Vipshop's consumer finance credit reached 4.4 million, compared with 1.6 million in the same period last year, an increase of 179%.
The path of retail upgrading is different, but the logic behind it is the same and the purpose is the same. Any business operation is carried out from easy to difficult, from shallow to deep, and e-tailing is no exception. The main supply side by the C-end of small and medium-sized sellers gradually to the scale of the brand and agent change; commodity categories from standard products to non-standard and full product change, from the virtual pieces of small pieces and easy to save the physical to the large, fresh and other categories to expand; goods distribution from the general time to the general time to reach the same day and the timing of the evolution of delivery; the state of the demand side of the natural growth of online traffic to the nearly stagnant growth of the fixed population, so that e-commerce platforms have to break the online boundaries to use digitalization to open up new offline spaces. Adapt to changes in the business environment and changes in consumer demand, from the point of view of enriching the shopping scene and improving the shopping experience, understand, digest and comply with the essence of retail and the rules, you can win the space to survive: Ali's systematic construction from the channel to the ecology, Jingdong's insistence on self-supporting e-commerce and infrastructure, Vipshop emphasizes the quality of e-commerce, Suning's main focus is the integration of the line online and offline, Gome's expansion from home appliances to the full range of categories, NetEaseKaolu stepped on the opportunity to Cross-border online shopping opportunities, millet to the upstream reform supply chain, China's e-commerce jianghu blossomed.