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PRESS RELEASE
October 30, 2018

2018 CEO’s Letter to Shareholders

Dear Alibaba Shareholders,

I am delighted to share with you Alibaba’s development over the past year and will take this opportunity to outline our strategy and plans for the future.

Alibaba celebrated its 19th anniversary recently, and we will soon launch the tenth 11.11 Global Shopping Festival. Since the founding of Alibaba in 1999, we have pursued our mission “to make it easy to do business anywhere.” Now, this mission carries even more significance in the digital era. Alibaba has evolved from an e-commerce company into a digital economy that is unique, energetic and innovative, with our businesses spanning commerce, logistics, entertainment, cloud computing and finance, among other sectors.

In the past year, Alibaba has reported high growth across its business units and set new records. For the fiscal year ended March 31, 2018, gross merchandise volume (GMV) of Alibaba’s core commerce reached US$760 billion, while full-year revenue increased by 58% year-over-year, the highest growth rate since our IPO. Mobile monthly active users on our China retail marketplaces in March 2018 increased by 110 million from a year ago, and we also achieved the largest quarterly growth in annual active consumers since our IPO in the quarter ended March 2018.

Tmall continued to gain market share, with its physical goods GMV recording a 45% increase year-over-year in fiscal year 2018, further consolidating its leadership in the B2C market. Annual active consumers on China retail marketplaces reached 552 million, driven by innovative content formats and greater success in targeting less-developed areas. Revenue from our international commerce retail business grew 94% year-over-year in fiscal year 2018. Lazada, our subsidiary and the largest e-commerce platform in Southeast Asia, along with AliExpress, our global retail marketplace platform, have recorded strong growth. Our Cainiao logistics data platform now enables 63% of parcel deliveries in China and operates a holistic supply chain solution to support the New Retail strategy. Cloud-computing revenue grew 101% year-over-year to RMB13,390 million (US$2,135 million) during fiscal year 2018, achieving 12 consecutive quarters of over and close to triple-digit growth. Amap, part of our digital infrastructure, has become the largest provider of mobile digital maps, navigation and real-time traffic information in China, and over 100 million Amap daily active users were recorded on the October 1 National Day this year.

We have made good progress in the digital media and entertainment sector. This summer, our online video unit Youku streamed all 64 games of the 2018 FIFA World Cup to fans in China, and in doing so, redefined the online viewing experience for major international sports events. The tournament witnessed users who enjoyed matches on Youku through more than 180 million mobile devices and smart TVs.

Two years ago, we unveiled our New Retail strategy by leading the integration of online and offline retail through digitizing store-based operations. In the past year, our Alibaba ecosystem expanded its reach through our investments in Sun Art Retail (hypermarkets) and EasyHome (furniture malls) and acquisition of Ele.me (food delivery).

Tmall and Taobao, our marketplaces that make up the flagship platform of our New Retail strategy, have seen strong growth as a partner for brand owners and retailers to spearhead digital innovation. More than 1,200 brands have digitized and upgraded a total of over 200,000 offline stores to become “smart stores.” Sun Art will complete the digital upgrade of all of its physical RT-Mart stores in China by the end of this calendar year, catering not only for in-store customers, but also customers who live within a three-kilometer radius. We now operate 77 Hema stores and the “Hema ideal living community” which again covers a radius of three kilometers, is gaining popularity. After fully acquiring Ele.me in May 2018, we strengthened our on-demand delivery network as well as established a leading company through the combination of Ele.me and Koubei to tap the enormous potential of the local services sector.

Within the Alibaba digital economy, millions of enterprises join hands to service more than 600 million consumers. Our economy not only offers better lifestyles for our consumers, it also serves as the infrastructure that supports enterprises in the process of their digital transformation. The Internet and data technology not only are creating new avenues for sales and distribution, but they also are driving innovation in marketing, consumer asset management, supply chain management, product planning and design, and manufacturing.

Underlining this revolution is the confluence of data insights on both enterprises and consumers. There are wide-ranging use cases and data assets within the Alibaba digital economy, and our success in cloud computing means that we have created a unique “Alibaba Operating System” for this digital age. Looking ahead, our vision is to deliver digital transformation for all our clients using cloud-computing technology in the areas of retail, marketing, finance, logistics and other supporting services within the Alibaba Operating System.

Globalization has always been Alibaba’s longterm strategy. We are making progress towards our goal to realize “global buy,” “global sell,” “global delivery,” “global travel” and “global pay.” This will ultimately create one truly globalized digital economy where goods can move freely around the world, and not just from China to the world.

We are also making comprehensive strategic plans to get ready for the coming era of the Internet of Things. When households, local communities, work places, commerce infrastructure and cities all become smart and connected, supported by cloud-computing technology, it will dramatically reshape business processes and lifestyles.

At Alibaba, we never cease to innovate and create in order to shape our future. When we listed Alibaba Group on the New York Stock Exchange in 2014, we shared our five-year near-term goal, which is to reach US$1 trillion in GMV by 2020. We are confident of attaining this in the not-distant future. Looking further, we aim to achieve a bigger goal by 2036: serve two billion consumers globally, help 10 million small and medium enterprises to do business on our platform profitably and create 100 million job opportunities during the process.

I want, again, to wholeheartedly thank all our shareholders, clients, customers and Aliren for their trust and support over the last year and for being part of the journey to get to where we are today. We are fully committed to a path of continuous innovation and value creation for our customers and shareholders. This will empower us to fulfill our mission to make it easy to do business anywhere.

Daniel Zhang
Chief Executive Officer
Alibaba Group Holding Limited