alibaba group-from strength to strength august 4 2017 · 3 august 5, 2017 deborah weinswig,...
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Alibaba Group:
From Strength to Strength—Anoverviewofthebusinessunitsoftheworld’slargeste-commercecompany
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TableofContentsExecutiveSummary.............................................................................................................3
CoreCommerce...................................................................................................................5Taobao—C2CRetailE-Commerce.......................................................................................................................6Tmall—B2CRetailE-Commerce........................................................................................................................10Juhuasuan—ASalesandMarketingPlatformforFlashSales...........................................................................131688.com—China’sOnlineB2BWholesaleMarketplace.................................................................................15AliExpress—GlobalB2COnlineMarketplace....................................................................................................18Alibaba.com—GlobalOnlineWholesaleMarketplace......................................................................................20Lazada—South-EastAsiaBasedE-CommercePlatform....................................................................................22
DigitalMediaandEntertainment.......................................................................................24AlibabaPictures—DigitalMediaandEntertainment........................................................................................25Xiami—Music-StreamingPlatform....................................................................................................................28AlibabaSports—B2BSportsandE-SportsPlatform..........................................................................................30YoukuTudou—VideoContentPlatform...........................................................................................................32UCWeb—MobileInternetServices..................................................................................................................34
InnovativeInitiatives.........................................................................................................36DingTalk—EnterpriseMessagingPlatform.......................................................................................................37YunOS—Cloud-BasedOperatingSystem..........................................................................................................40AutoNavi—DigitalMap,NavigationandLocation-BasedServices....................................................................43AlibabaHealth—OnlineHealthcarePlatform...................................................................................................46
Others–LocalServicesandEnablingFunctionsofCommerce.............................................48Koubei—O2OLocalServices.............................................................................................................................49CainiaoNetwork—AffiliatedLogistics...............................................................................................................51AntFinancial—OnlineFinancialServicesProvider............................................................................................53Alipay—Third-PartyOnlinePayment................................................................................................................56AlibabaCloud—ProviderofCloud-ComputingServicestoBusinessesandEntrepreneurs..............................60Alimama—Data-DrivenMarketingTechnologyPlatform.................................................................................62
Appendix...........................................................................................................................65Alibaba’s25OperationUnits............................................................................................................................66
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
ExecutiveSummaryAlibabawasestablishedin1999asabusiness-to-business(B2B)portalconnectingChinesemanufacturerstooverseasbuyers,essentiallymakingiteasytodobusinessanywhere.Thegrouphassincegrowntobecomethelargeste-commercecompanyintheworldintermsofgrossmerchandisevolume(GMV).ForthefiscalyearendedMarch31,2017,AlibabahadaGMVof¥3.8trillion(US$0.43trillion)and454millionannualactivebuyersonitsmarketplaces.
Inthisreport,weprovideanoverviewofAlibaba’sdifferentbusinesssegments,andhowtheyallworktogetherusingitsplatformsandbigdatatechnologytoenablesmallenterprisestocompetemoreeffectively.
Vision—“BorninChina,GrowfortheWorld”:ExecutiveChairmanJackMahasalong-termvisionforthecompany:hewantsAlibabatobecomeatrulyglobalcompany,providingsolutionstorealworldproblemsandusinge-commercetohelpglobalizationbymakingtrademoreinclusive.Thecompany’slong-termstrategicgoalistoserve2billionconsumers—one-thirdoftheworld’stotalpopulation—andtosupporttheprofitableoperationof10millionbusinessesonitsplatformsby2036.Byfiscalyear2020,AlibabaexpectsGMVtomorethandoubletoreachUS$1trillion.
Alibaba—initforthelonghaul:Thegroup’sphilosophyistobuildlong-termstrategicvalueanddrivesynergiesforitsglobalbusinessthroughorganicgrowthandstrategicacquisitions.TechnologyhasbeenthedrivingforcebehindthephenomenalgrowthoftheAlibabaeconomy,andwillcontinuetodriveitgoingforward.Thegroupcontinuouslyincubatesnewbusinessunits,allowingthemtogaintractionandtogeneratesustainablecashflow.
AnoverviewofAlibabaGroup:Sinceitsfounding,thegroup’soperationshavebeenanchoredincorecommerce,whichstillaccountsfor72%oftotalrevenuesinfiscalyear2017.Thecompanyhassincemovedintonewareassuchasdigitalentertainmentandlocalservicesthroughinvestmentsandorganicgrowth.Ourdiscussionisbasedonthebroadcategoriesofcorecommerce,digitalmedia&entertainment,innovationinitiatives,localservicesandenablingfunctionsofcommerce.
Source:alibabagroup.com
AlibabaisChina’slargeste-commercecompanywithavisiontobeatrulyglobalcompany.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Corecommerce:Corecommercereferstothecombinationofretailandwholesalecommercebusiness.TherehavebeentwonotableshiftsinAlibaba’sretailcommerceplatforms:first,fromitsoriginsasamarketplacetobecomingasocialcommerceplatform,allowingconsumerstohavefunexploring;andsecond,itsmovefromonlinetooffline,providingconsumerswithaseamlessomnichannelexperience.
Units:Alibaba.com,1688.comTaobao,Tmall,AliExpress,Lazada,Juhuasuan
Digitalmedia&entertainment:Thissegmentwasestablishedwiththeaimofmakingtheshoppingexperiencemoreenjoyableforconsumers.Alibabaseesstrongsynergiesbetweencommerceandentertainment.Thus,ithasbeenbuildingitscontent-generationecosystemandleveragingitsmediaassetstotransformcommerceandbringnewusersanddatatotheAlibabaecosystem.Thedigitalmediaandentertainmentsegmentprovidesvideos,movies,newsfeeds,music,sports,literatureandgamestoconsumers.
Units:YoukuTudou,UCWeb,AlibabaSports,AlibabaPictures,Xiami
Innovativeinitiatives:ThissegmentincludesserviceofferingsthataimtoexpandAlibaba’secosystemandfosterasenseofcommunity.
Units:YunOS,AutoNavi,DingTalk,AlibabaHealth
Others—localservicesandenablingfunctionsofcommerce:ThissegmentcomprisesthekeyinfrastructureofAlibaba’secosystem.Technologiessuchascloudcomputing,payments,logisticsandlocalserviceswhichpenetrateeveryfacetofconsumers’dailylives.
Source:alibabagroup.com
Units:Koubei,CainiaoNetwork,Alipay,AntFinancial,AlibabaCloud,Alimama
TheAlibabaecosystemexpandedintoareassuchasdigitalentertainment,innovativeinitiatives,localservicesandinfrastructurethroughinvestmentsandorganicgrowth.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Core Commerce
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Taobao—C2CRetailE-Commerce
Source:world.taobao.com
BusinessOverviewTaobaoisChina’slargestconsumer-to-consumer(C2C)onlinemarketplace.Sellerspostitemsonvirtualshopsforbuyerstobrowseandpurchaseusingthird-partypaymentproviderAlipay.Buyerscansearchandcompareproducts,andcommunicatewithsellersontheTaobaowebsiteormobileapp.
Revenuemodel:Taobaodoesnotchargeasalescommission,butderivesrevenuefromitsvalue-addedservices(suchasstorefrontdesign,marketingandpromotionalactivities).
StrategyandValuePropositionTaobaoisChina’slargestC2Csaleschannelandstrivestobealifestyledestinationforconsumers.
Easeofsettingupstores:AsimpleregistrationprocessandminimalinitialcostsmakeiteasyforsmallbusinessesandindividualmerchantstosetupstoresandstartsellingonTaobao.
Infrastructure:TransactiononTaoboarefacilitatedbyAlipay’spaymentinfrastructureandCainiaoNetwork’slogisticsandfulfillmentcapabilities.
Consumerprotectionagainstcounterfeits:ConsistentwithAlibaba’slong-termstrategytoriditsplatformsofcounterfeits,Taobaoleveragesbigdatatechnologytodetectcounterfeitproducts.AlibabahasjoinedforceswithChineselawenforcementauthoritiestoarrestandsueTaobaouserssellingcounterfeits.TheescrowfunctionofAlipayletsconsumersdecidetopayforitemsonlyiftheyaresatisfiedwiththeproducts.
TaobaoisChina’slargestconsumer-to-consumer(C2C)onlinemarketplaceoperatedbyAlibaba.
TaobaoleveragesAlibaba’secosystem,enablingmerchantstosellthroughsocialcommercewithtechnologiessuchasAI.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AIandthebigdata-drivenuserexperience:Taobaoempowersmerchantswithartificialintelligence(AI)andbigdatatechnology.Bigdataapplicationsincludethefollowing:IntelligentMerchantMechanism,IntelligentRecommendation,IntelligentPersonalAssistantandIntelligentMarketing.DianxiaomiisanAIcustomerservicechatbotdesignedtohelpsellersautomatetheircustomerserviceanddealwithcustomerrequests.
Source:dianxiaomi.com
Retail-tainment,communityandcontent:TaobaoleveragesAlibaba’secosystem,enablingmerchantstosellthroughsocialcommerce.SomeexamplesofsocialcommerceopportunitiesforTaobaosellersinclude:TaobaoGuang(aplatformforfemaleuserstosharephotosandfashionadvice);TaobaoLive(aplatformformerchantstopromotetheirproductsthroughlivebroadcasting);andgroupbuyingwithAiTaobaoandYitao,amongothers.Alibaba’svideoportal,Youku,anditsowninstant-messagingappAliWangWang,helpTaobaosellersincreaseconversion.
Source:alimarket.taobao.com
Taobaohasapenetrationrateofover95%inChina’sC2Conlineretailmarket.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Empowerinnovation:Taobaoisinitselfanecosystemforinnovativeandentrepreneurialmerchants.TheTaobaoMakerFestivalisaneventthatshowcasesinnovativeproductsandconnectsentrepreneursandconsumers.
Long-taileffect:TaobaoboaststhewidestproductbreadthanddepthamongallChineseC2Cmarketplaces.
KeyMetricsGMVtransactedonTaobaoMarketplaceinthefiscalyearendedMarch31,2017was¥2,202billion,ayear-over-yearincreaseof17%,accountingfor58%oftotalGMVtransactedonallAlibaba’sChinaretailmarketplaces.
TogetherwithTmallandJuhuasuan,Alibaba’sannualactivebuyersreached454millioninthefiscalyearendedMarch31,2017.
PeersTaobaohasapenetrationrateofover95%inChina’sC2Conlineretailmarket,accordingtoareportbyJPMorgan.EachNetandYmatou,twocompetitors,arelesspopularandbothmorefocusedonsellingforeignproducts.
EachNet,introducedin2003,isamarketleaderinonlineauctionsinChina.
Source:eachnet.com
Ymatou,establishedin2009,isacross-bordere-commerceplatformforB2CandC2Cproducts.
Source:ymatou.com
WeexpectTaobaotocontinueitsshifttoalifestyledestinationplatform.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
OutlookTaobaoasalifestyledestination:WeexpectTaobaotocontinueitsshiftfromatraditionalonlinetransactionsplatformtoalifestyledestinationplatformconsistingofconsumermediaandacommunity.China’sC2Ce-commercemarkethasbeenshrinkingasconsumersturntoB2Cplatformsforhigh-qualityproducts.WeexpectTaobaotoremainacentralcommunitywhereChineseconsumerscanengageandtransact.
Figure1.TheChangingCompositionofChina’sOnlineRetailMarket
Source:Analysys
9%19%
26%36%
42%48% 53% 55%
91%81%
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Tmall—B2CRetailE-Commerce
Source:tmall.com
BusinessOverviewTmallisChina’slargestbusiness-to-consumer(B2C)platformconnectingglobalbrandsandretailerswithChineseconsumers.Tmalloffersaplatformforbrandstosell,buildtheirbrandimageandenhancetheconsumerexperience.Itwasestablishedin2010andnowhasover10,000brandsonitsplatform.
Revenuemodel:Tmallchargesmerchantsanannualservicefee.Aswell,foreachtransaction,itchargesacommissionfeebasedonthecategoryofproductsold.
StrategyandValuePropositionHelpbrandsunderstandChineseconsumers:Tmall’stech-enabledtoolshelpbrandsunderstandandeffectivelytapChina’sfast-growingandincreasinglydiverseconsumerbase.Between2016and2021,China’sconsumptionisforecasttoincreasebyUS$1.8trilliontoreachUS$6.1billion,accordingtoBCG.
Consumerengagementthroughinnovativetechnologies:Alibabahelpsbrandsengagewithconsumersthroughtechnologiessuchasbigdata,augmentedreality(AR)andvirtualreality(VR).DuringitsannualSingles’Dayshoppingfestivalin2016,TmalllivestreamedagalaeventandintroducedtheVRBuy+channeltoincreaseconsumers’connectionwithbrands.MerchantsonTmallcanusetheplatform’sbigdatatopresenttargetedproductrecommendationsandadvertisingtoconsumers.
TmallisChina’slargestbusiness-to-consumer(B2C)platformandalsohasTmallGlobal,across-bordere-commerceplatform.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Superiorbrandexperiencethrougheffectivemarketing:TmallletsbrandsconnectdirectlywithconsumersbyleveragingAlibaba’smediaassets.TheB2Cplatformhostsyear-roundconsumerfestivals,suchasSingles’Day,Double12andTmallSuperBrandDay.GMVonSingles’Dayreached¥120billionin2016.
Emphasisonquality:TmalliswellpositionedtobenefitfromChina’sconsumptionupgradeandincreasingdemandfortrustedandhigh-qualitygoods.RetailersmustgothroughavettingprocesstoopenastoreontheplatformandTmallhaszerotoleranceforcounterfeits.Tmallprovidesclearlydefinedpoliciesforordershipmentandreturnshandling.
Thego-tochannelforcross-bordere-commerce:TmallGlobal,Tmall’scross-borderretailplatform,housestheflagshipstoresofinternationalbrands,enablingthemtoselltoChineseconsumers,regardlessofwhethertheyhaveaphysicalpresenceinthecountry.
KeyMetricsSome75%ofconsumerbrandsontheForbesTop100mostvaluablebrandslisthaveapresenceonTmall,asofMarch2017.Approximately200millionviewerstunedintoTmall’sSingles’Dayin2016,almostdoublethe110millionviewerswhowatchedtheSuperBowl.
PeersAsanintegratedB2Cmarketplace,Tmallhadclosetoa58%shareofChina’sB2Conlineretailmarketin2016,followedby26%forJD.com.
Incross-bordere-commerce,TmallGlobalcompetesprimarilywithJDWorldwideandAmazon.cn.
Source:amazon.cn
Tmallcompeteswithvariouse-tailersacrossdifferentverticals.Forexample,itcompeteswithVIPShopfordiscountluxury,SuningandGomeforelectricalappliancesandDangdangforbooks.
Tmallhelpsbrandsengagewithconsumersthroughtechnologiessuchasbigdata,augmentedreality(AR)andvirtualreality(VR).
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Figure2.ChinaB2CE-CommerceMarketShare,2016
Source:Analysys
OutlookApivotalroleinspearheadingAlibaba’sNewRetail:TmallwillleadtheimplementationofAlibaba’sNewRetailinitiativebyintegratingonlineandphysicalretailthroughdatatechnology.WeexpectNewRetailtobeanothergrowthdriverforbothTmallandChinae-commercegoingforward.
Globalization:Alibabaisspearheadingtheefforttomakeglobaltrademoreinclusiveandtoremovebarriersandenablesmall-andmedium-sizedenterprises(SME)tosellglobally.
Figure3.ChinaB2CE-CommerceMarketSizeandYear-over-YearGrowth,2009–2016
Source:Analysys
22 103224
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Year-over-YearGrowth
58%26%
4%3%
10%
Tmall57.5%
JD.com26.2%
VIPShop3.6%
Suning2.5%
Others10.2%
TmallwillplayapivotalroleinspearheadingAlibaba’sNewRetailinitiativesbyintegratingonlineandphysicalretailthroughdatatechnology.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Juhuasuan—ASalesandMarketingPlatformforFlashSales
Source:ju.tmall.com
BusinessOverviewJuhuasuanisaleadingdailydealsmarketplacewithinAlibabathatservesasanalternativeavenueforTaobaoandTmallmerchantstomarkettheirproducts.Juhuasuanusesflashsalesandpromotionstoacquirenewcustomersandraisebrandawareness.Itwasestablishedin2010andwasintegratedwithTmallattheendof2016,yetoperatesunderitsowntradename.
Revenuemodel:Juhuasuanchargesbrandsaone-timefeeandcommissionforproductlisting,typically1%–5%ofthetransactionvalue.Eachproductisdisplayedandsoldfortwodays.Juhuasuanalsochargesbrandsforadvertisingservicessuchasplacingadsonitshomepage.
StrategyandValuePropositionAmarketingplatformthathelpsmerchantsachievebetterresults:Throughpromotionalcampaigns,Juhuasuanhelpsmerchantsbuildbrandawareness,launchnewproductsandreachnewcustomersthroughpromotions.JuhuasuanfitswellwithChineseconsumers’preferenceforgroupbuying,andhasperformedwellduringshoppingfestivalssuchasChineseNewYear,Singles’DayandDouble12.
Competitivepricingandqualityservice:Juhuasuanisselectiveabouttheproductsitonboards,andprovidescustomerserviceanddeliveryforusers.Itselectsproductsbasedontheirhistoricalsalesandservicerecords.Themerchantneedstoguaranteeaproduct’spricingisthelowestfor30daysbeforeandafterthepromotion.About70%oftheproductsofferedonJuhuasuanareneworpopularproducts.
Customer-centricproductsandserviceofferingsasacompetitiveAdvantage:JuhuasuanoffersawiderrangeofcustomizedproductsandservicescomparedwithTmallandTaobao.Inthepast,ithasoffereduniqueofferingssuchasdiscountedinsurance,afootballlotteryandluxurycruises.
Juhuasuanusesflashsalesandpromotionstohelpbrandsacquirenewcustomersandraiseawareness.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Shareconsumeranalyticsdatawithmerchants:Juhuasuansharescomprehensiveconsumeranalyticswithitsmerchants,whichisvaluableforretailerswhoarebuildingtheirfranchiseanddevelopingproductsforChineseconsumers.
MetricsJuhuasuanhas30millionuniquevisitorsdaily.Some900productsand50brandsaredisplayedonthesiteeachday,asofMarch2016.
ThecompositionofJuhuasuan’sGMVin2016was:fashionandapparel(32.8%),electronics(21.9%),groceries(18.6%),brandeditems(11.6%)andothers(15.1%).
Source:jusp.tmall.com
OutlookStrategicimportanceofmarketingintheNewRetailera:Juhuasuanisexpectedtoplayasignificantroleinhelpingmerchantstotransitiontoe-commerce.ItwasintegratedwithTmallinaninternalreorganizationinDecember2016,whichwillmakesellingandmarketingonTmallseamless—brandswilllaunchnewproductsthroughTmallandlaunchmarketingcampaignsthroughJuhuasuan.
Furtherexpandintocross-bordere-commerce:Juhuasuan’spriorityistobethemosteffectivechannelforinternationalbrandstoenterandlaunchnewproductsontheChinesemarket.JuhuasuanwillgiveprioritytooverseasbrandsthatarenewtotheChinesemarket.Withtheinclusionofoverseasbrands,itwillhelptoexpandthebreadthanddepthofitsproductofferings.
PeersJuhuasuan’speergroupconsistsofC2BsocialcommerceplatformssuchasPingduoduo,JuanpiandJumei.
Goingforward,JuhuasuanwillgiveprioritytooverseasbrandsthatarenewtotheChinesemarkettohelpthementerandlaunchnewproductsintheChinamarket.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
1688.com—China’sOnlineB2BWholesaleMarketplace
Source:1688.com
BusinessOverview1688.comisanintegratedB2Bplatformthatconnectslocalbuyersandsellersfortradeofgeneralmerchandise,rawmaterials,andindustrialandchemicalproducts,amongothers.Launchedin1999,itisapioneerinChina’swholesaleB2Bmarket.
Revenuemodel:1688.comchargesanannualmembershipfeeaswellasfeesforvalue-addedservices(suchaspromotionalandadvertisingfees,andordermatchingfees).
Source:cxt.1688.com
1688.comisanintegratedB2Bplatformthatconnectslocalbuyersandsellersfortradeofvariousmerchandiseandrawmaterials.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
StrategyandValuePropositionEffectiveonlinesourcingchannelformerchants:1688.comservestheupstreamvaluechain,whichincludesretailersandmerchantsonTaobao.Thekeycharacteristicsof1688.comareattractivepricesandhighertransactionvolume.Itiscommonforbuyerstobuythesameproductatafractionofthepricewhenpurchasinginbulkfrom1688.com.
Value-addedmembershipservicesforsuppliers:1688.comprovidesmembershipservicessuchasexhibitionspotsatconferences,advertising,dataanalyticsandotherfunctionsthroughChinaTrustPass.Italsoprovidesadvertisingservicessuchaspay-for-performance(P4P)marketingandkeywordsauctions.
Source:cxt.1688.com
Community:1688.comprovidesanonlinecommunityformerchantsandsupplierstoshareadviceandfieldqueries.ItisChina’slargestB2Bsourcingplatform,givenitsfirst-moveradvantage.
Metrics1688.comhadover961,000payingmembersasofMarch31,2017,and230millionsuppliers,asofMarch31,2016.
Approximately60%ofitsordersarefrombusinessesoutsideAlibaba’se-commerceplatformssuchasTaobaoandJuhuasuan.
PeersPeersof1688.com’sB2Be-commerceplatformincludeHC360,makepolo,GlobalSourcesandDHGate.
1688.comisChina’slargestB2Bsourceplatform,givenitsfirst-moveradvantage.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:hc360.com
OutlookContinueddigitalization:1688.comwillcontinuetodrivemorevaluecreationforSMEsthroughdigitalization.1688.comaimstobecomeChina’smost-efficientSMEtradingplatformwithinthreeyears,andChina’sNo.1SMEtradedata-sharingplatformwithinfiveyears.
Figure4.China’sB2BE-CommerceMarket,2016
Source:iResearch
48%
6%5%5%
36%Alibaba
GlobalResource
JQW
DHGate
Others
Alibabaaccountsfor48%ofChina’sB2Be-commercemarket.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AliExpress—GlobalB2COnlineMarketplace
Source:aliexpress.com
BusinessOverviewAliExpressisaninternationalB2CmarketplaceforoverseasconsumerstobuydirectlyfrommanufacturersanddistributorsinChina.Itwaslaunchedin2010andisthethird-largestEnglishonlineshoppingwebsiteglobally,coveringover200countriesandoperatingin16locallanguages.
Revenuemodel:Registrationisfree.AliExpresschargesmerchantsanannualfeeanda5%commissionforeachtransaction.
StrategyandValuePropositionExpediteddeliverysupportedbyadataintelligentnetwork:OrdersplacedonAliExpressaredeliveredbyCainiao’scross-borderfulfilmentanddeliverynetwork.Cainiao’sopendatatechnologyplatformissupportedbyautomation,smartdevicesandAI,andhasledtoincreasedefficiency.Forexample,deliverytimeinRussiasawa20%improvementinfiscalyear2017.
Tech-enabledtoolsforeffectiveselling:AliExpresshasasuiteofappsforpayment,translationandcommunicationtohelpChinesemerchantsinteractwithoverseascustomersmoreeffectively.
Retailwithentertainment:AliExpresshasintegratedentertainmentelementsintotheplatformtoenhanceconsumers’shoppingexperienceandtheirinteractionwithbrands.ConsumerscantuneintoAliExpressLIVEtointeractwithcewebritiesandbrandswholivestreamtheircontent.Livestreamingisalsousedduringshoppingfestivalsforbrandstoengagewithconsumers.
KeyMetricsAliExpresshadmorethan100millionoverseasbuyersfrom220countriesandregions,asofApril2017.
OnSingles’Day2016,AliExpresshandled35.8millionorders,ayear-over-yearincreaseof68%,covering230countriesandregions.
Thetop-fivemarketsbytransactionvalueforAliExpressare:Russia,theUS,Spain,Brazil,FranceandtheUK.AliExpressisoneofthemostpopularcross-bordere-commercemarketplacesinRussia.
AliExpressisaninternationalB2CmarketplaceforoverseasconsumerstobuydirectlyfrommanufacturersinChina.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Thetop-fiveproductcategoriesbytransactionvalueare:fashionandaccessories,phones,cosmeticsandhealth,computers,jewelryandwatches.
PeersPeersincludeAmazonandeBay.
AmazonisthelargestonlineretailmarketplaceintheUSbytotalsales.Ithassellersfrommorethan130countriesandcustomersin185countries.
Source:amazon.com
eBayisanonlineC2CandB2Cplatformthatoperatesinapproximately30countries.
Source:ebay.com
OutlookStrengthenbrandbuildingandglobalizationefforts:ThefuturestrategyofAliExpressistoservemorecustomersgloballytoalignitselfwiththemissionofAlibaba.AliExpressaimstofurthersupportChinesemerchants’expansioneffortsoverseasinareasincludingmarketing,brand-building,logistics,financialandvalue-addedservices.
AliExpresswillplayaprimaryroleinsupportingthegroup’soverseasexpansionefforts.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Alibaba.com—GlobalOnlineWholesaleMarketplace
Source:alibaba.com
BusinessOverviewAlibaba.comisChina’slargestglobalonlinewholesalemarketplaceandistheinternationalversionof1688.com.Alibaba.com,whichisinEnglish,servesbuyersfromover200countriesbyconnectingthemwithsuppliersinChina.Combined,1688.comandAlibaba.comarethebiggestdomesticandinternationalB2Bwholesalemarketplacesglobally.
Revenuemodel:Alibaba.comdoesnotchargeacommission.Itgeneratesrevenuefrommembershipfees,marketingservicesandvalue-addedservices.
StrategyandValuePropositionAneffectivechannelfordomesticsupplierstoexporttotherestoftheworld:Alibaba.comhelpsdomesticsuppliersentertheinternationalmarketthroughproductlistings,promotionalcampaignsandordermatching.
Digitizingglobaltrade:Throughsolutionsandpartnerships,OneTouch,anaffiliatedimportandexportservice,providesimport/exportbusinesssolutionssuchascustomclearance,value-addedtax(VAT)refundsandothervalue-addedservices.Alibaba.comhaspartnershipswithdomesticthird-partylogisticsprovidersandinternationalplayerssuchasUPS,Fedex,Maersk,DHLandKuehne+Nageltoboostcross-borderlogisticsoperations.
Source:home.kuehne-nagel.com
Alibaba.comisChina’slargestglobalonlinewholesalemarketplaceandhelpsdomesticsuppliersentertheinternationalmarket.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Qualityassuranceforglobalbuyers:Alibaba.comlaunchedtheTradeAssurancePrograminordertocreatetrustandattractoverseasbuyers.Buyersareeligibleforrefundsrelatedtoqualityissues.AlibabaOneTouchvetssuppliersthatwishtoparticipate.
Financingsupportenabledbydatatechnology:“e-CreditLine”providestradefinancingtosmallbusinessesbuyingandsellingonAlibaba.com.Thecreditfinancingdecisionispoweredbyanautomatedcreditscoringsystemthatisabletograntfullapprovalwithin24hours.
PeersAlibaba.comisthelargestB2BmarketplacegloballyintermsofGMV.Ithas18millionbuyers,followedbyThomasNetintheUS(1.8millionbuyers),TradeIndiainIndia(1.6millionbuyers)andEC21inSouthKorea(1millionbuyers).
Source:thomasnet.com
MetricsAsofMarch31,2017,Alibaba.comhasover141,000payingmembers.
OutlookGlobalization:Alibaba.comwillplayapivotalroleinsupportingtheElectronicWorldTradePlatform(eWTP)initiativepromulgatedbyChairmanJackMa.ThevisionofeWTPistolowertradebarriersforSMEsandmakeglobaltradefrictionless.
Source:alibabagroup.com
Alibaba.comprovidesvalue-addedservicessuchasqualityassuranceforglobalbuyers,tradefinancingtosmallbusinessesbuyingonitsplatform.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Lazada—South-EastAsiaBasedE-CommercePlatform
Source:lazada.com.my
BusinessOverviewLazadaisane-commerceplatformfocusedonSouth-EastAsia,withoperationsinSingapore,Indonesia,Malaysia,thePhilippines,ThailandandVietnam.Itoperatesamarketplacemodelthatallowsthird-partyretailerstoselltheirproductsontheLazadaplatform(since2013)andalsosellsinventorydirectlytocustomersfromitsownwarehouses.
LazadawaslaunchedbyRocketInternetin2012andiscurrently83%ownedbyAlibaba.
Revenuemodel:Lazadaderivesrevenuesprimarilyfromcommissions.Itchargesa2%paymentfeeandacommissiononproductssoldonitsmarketplacethatrangesfrom0.5%to12%.Otherrevenuestreamsincludeadvertising.
StrategyandValuePropositionAne-commerceleaderinSouth-EastAsia:LazadagivesAlibabaexposuretotherapidly-growingSouth-EastAsiae-commercemarket,withouthavingtobuildasitefromthegroundup.Onlineshoppingaccountsforlessthan5%oftheregion’sretailsalescurrently,andthisshareisexpectedtoincrease.B2Conlineretailsalesareestimatedtoincreaseatacompoundannualgrowthrateof17.1%toUS$25billionin2020fromUS$11billionin2015,accordingtoFrostandSullivan.
SynergiesbetweenLazadaandAlibaba’secosystem:ThecooperationbetweenAlibabaandLazadahasbeenmutuallybeneficial,helpingbothplayerstotapintoanexpandedcustomerbase,broadeningtheirproductrangeandcapabilities.LazadahasonboardedTmallbrandstoitsmarketplaceandenableditsmerchantstosellthroughTaobao,increasingthechoiceofbothconsumersandmerchants.Lazada’slogisticscapabilitiesarestrengthened,asitcannowtapintoCainiaoNetworkforlogisticsservices.
Lazadaisane-commerceplatformfocusedonSouth-EastAsiathatiscurrently83%ownedbyAlibaba.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
KeyMetricsLazada’sGMVfortheDouble12shoppingfestivalin2016wasUS$40.5million.
PeersLazadaisthedominante-commerceplayerinSouth-EastAsia.OtherlocalplayersincludeTokopedia,anIndonesianonlineC2Cmarketplacelaunchedin2009,andShopee,aTencent-backedplatformbasedinSingapore.Otherglobalmarketplacesarealsointerestedinenteringthemarket.JD.comannouncedplanstoexpandtoThailandbeforetheendof2017.AmazonhasalsobeenreportedtobeplanningtoenterSouth-EastAsia.
Source:tokopedia.com
Source:shopee.sg
OutlookGlobalexpansionstrategy:Alibaba’sstrategyistotransformLazadaintoaglobalmarketplacefromaSouth-EastAsiamarketplace.Lazadaisalsofocusingonaddingsmallermerchantstoitsonlinemarketplace.ThisispartofAlibaba’slong-termvisiontoreachGMVofUS$1trillionby2020andtoincreaseitsrevenuecontributionfromoutsideofChinato50%
LazadaisthelargestinSouth-EastAsia’sfragmentede-commercemarket.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Digital Media and Entertainment
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AlibabaPictures—DigitalMediaandEntertainment
Source:alibabapictures.com
BusinessOverviewAlibabaPictures(AliPictures)isthemovieproductionanddistributionarmofAlibaba.Itproduces,investsinanddistributesmoviesandTVprograms,andoperatesanonlineticketingplatforminChina.InvestedinbyAlibabain2014,AliPicturesismajorityownedbyAlibabaGroupandtradesontheHongKongStockExchangeundertheticker1060HK.
Thefourmainareasofoperationare:1)moviestudio,contentcreationandproduction;2)Internet-basedmarketinganddistribution;3)entertainmente-commerce;and4)international.
Revenuemodel:AliPicturesgeneratesrevenuefromcommissionsandservicefeeschargedonmarketingandticketingforthird-partyfilms(75%ofitsrevenuein2016),boxofficeincomefromitsproprietaryfilmproductions(23%ofrevenue)andothers(2%ofrevenue).
StrategyandValuePropositionFullcoverageofthefilmindustryvaluechain:TheoperationsofAliPicturesspantheentirefilmindustryvaluechain,fromfinancingandproductionoffilmstomarketing,distributionandticketing.
Platform-orientedapproach:AliPicturesaimstocreateanintegratedO2Oplatformfortheentertainmentindustrybyconnectingtheofflinecinemacircuitandonlinedistribution.AliPictureshasastrategiccooperationagreementwithAlibabaforthreeyearstopoolresourcestoco-developcontent.
ThecooperationletsitleveragetheassetsoftheAlibabaecosystem:
• AlibabawillgrantexclusiverightsofworkfromAlibabaLiterature,AlibabaGamingandYoukutoAliPictures.
• Alibaba’smediaassetssuchasthevideostreamingsiteYoukuTudou,OTT(subscriptioncontentbusiness)TmallBoxOfficeandTaobaoonlineticketingTaoPiaopiaocanhelpmakecontentdistributionmoreeffective.
• Alipaycanmakepaymentforcontentmorestreamlined.
AliPicturesisthemovieproductionanddistributionarmthatismajorityownedbyAlibabaandtradesas1060HK.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Internationalpresence:AliPicturesaimstoproducecontentforaglobalaudience.ItinvestedinAmblinPartnerstoco-produceanddistributemovies,andhaspartnershipswithHollywoodstudiossuchasParamountPicturesandSkydanceMedia.AliPicturesisalsocommittedtodevelopingitsbusinessinIndiaandhasbeenconnectedtoseveralinvestmentsthere.
Digitalmarketinganddataanalytics:ConsumerdataandinsightsgeneratedfromtheAlibabaecosystemwillsupporttargetedmarketingeffortsforAliPictures.Furthermore,Alibabaalsoinvestedinfilmdataanalyticsandcontentdistributionplatformstoincreaseuserengagementandmarketshare.
FocusonIPandmade-for-Internetcontent:AliPictureswillfocusonInternetdramasasthekeygrowtharea,giventherapidgrowthofonlinevideostreaming,whichwillbecomeanimportantchannelforcontentdistribution.IthasbeeninvestinginaplatformtoprovideonlinemoviecontentcreatorswithopenIPsandresources.AliPicturesalsooperatesYulebao,aC2Bfilmproductionplatform,toprovideresourcesforfinancing,licensingandmarketing.
Source:taobao.com
KeyMetricsAliPictures’onlineticketplatformTaoPiaopiaohadover25millionMAU,asofJune2016,andthedailymaximumnumberofticketssoldreached3million.
Source:dianying.taobao.com
ItssoftwaresolutionYKSEhasover1,000theatreclients,amongwhich,60%haveannualboxofficerevenuesofover¥10million.
AliPicturesaimstoproducecontentforaglobalaudience,havinginvestedandpartneredwithoverseasstudios.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
PeersAliPictures’peersincludeChina’slargestfilmcompanies,suchasAMCEntertainment,HuayiBrothers,TencentPicturesandcinemaoperatorWandaCinemaLine.
Source:huayibrothersent.com
OutlookStriveforsustainableprofitability:AliPictureswillseekasustainableprofitmodelandhigh-qualityproductionstodrivefurthergrowth.China’sboxofficerevenuein2016was¥46billion,thesecond-largestmoviemarketaftertheUS,andisestimatedtoreach¥86billionin2018,accordingtoiResearch.However,Chineseboxofficegrowthhasbeendeceleratingfollowingthejumpinbox-officerevenuesin2014and2015,whichwasattributabletolower-pricedticketsononlineplatforms.
Investforgrowth:AliPictureshasbeenexpandingitsfilmecosystemthroughacquisitionsinfilmandTVproduction,distributionandticketing,whichwebelievewillincreaseitscompetitiveness.Thecompanyhasaninvestmentfundaimedatbuildingassetsacrossthefilm-productionchain.RecentinvestmentsincludetheDadicinemachaintostrengthendistribution;produceranddistributorBonaFilmGroup;filmfinancinggroupHeheFilm;AmblinPartners;anddigitalmarketingplatformDamai.
Filmco-productionswithoverseasstudios:AliPicturesisexpectedtoleadco-productionwithHollywoodandinvestmentsinforeignfilms,followingitsstrategicpartnershiponco-productionwithStevenSpielberg’sAmblinPartners.
AliPictureshasbeenexpandingitsfilmecosystemthroughacquisitionswhichwebelievewillmeaningfullyincreaseitscompetitiveness.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Xiami—Music-StreamingPlatform
Source:xiami.com
BusinessOverviewXiamiisamusic-streamingplatformunderAlibaba’smusicdivision.Itwasfoundedin2006,acquiredbyAlibabain2013andintegratedwithTiantiantoformtheAlibabaMusicDivisionin2015.
Revenuemodel:Xiamiearnsfeesfromadvertisingandpaidsubscriptionsforitsmusic-streamingservices,similartoSpotify.
StrategyandValuePropositionGlobalstrategicpartnerships:Xiami,partofAlibaba’smusicdivision,hasinternationalanddomesticlicensingpartners,includingUniversal,BMGandK-PoprecordlabelSMEntertainment.
Useoftechnologytofostercommunity:TheXiamiplatformprovidessupporttoindependentChinesemusiciansandhelpsthemgetdiscovered.
Platformapproach:XiamiisabletoleverageAlibaba’sassets,whichcovermarketingandadvertising,payments,e-commerce,etc.
PeersPeersaremajormusic-streamingplatformsinChina,whichincludeNetEaseCloudMusic,QQMusic,SogouMusic,KugouMusic,KuwoMusic,BaiduMusic,YinyueTai,etc.
Xiamiisamusic-streamingplatformownedbyAlibaba.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:mp3.sogou.com
MetricsXiamiMusichasover14millionMAU,asofSeptember2016,accordingtoQuestMobile.TheXiamiMusicmobileapphasbeeninstalledon9milliondevices,asofDecember2016.
OutlookStructuralgrowthstory:China’smusic-streamingindustryisforecasttogrowrapidlythroughto2020,accordingtoAnalysys.Thestructuralgrowthtrendisprimarilydrivenbyconsumers’increasingwillingnesstopayforhigh-qualityaudiocontent,risingincomelevelsandwidespreadaccesstocloudstorageand4G/5Gnetworks.
Policysupport:XiamiwillcontinuetobenefitfromtheChinesegovernment’sculturaldevelopmentstrategytosupportmultimediacontent.
Licenseinfringementremainsariskformusic-streamingplatformsinChina.Xiami’sservicesweresuspendedbrieflyin2015,asitwasembroiledinmusiccopyrightdisputeswithregulators.Xiamihasproactivelymitigatedtheriskbyobtaininglegalrightsformusiccatalogs.
XiamiMusichasover14millionMAU.
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August5,2017
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AlibabaSports—B2BSportsandE-SportsPlatform
Source:alisports.com
BusinessOverviewEstablishedin2015,AlibabaSports(Alisports)developsandoperatessportsIP,sportingevents,e-sportscontests,sportingvenues,sportsmerchandiseandacquisitionsofselectedmediarights.
Revenuemodel:Alisportsiscurrentlyfocusedonscalingupandexpandingthereachofitsinfrastructure.Basedonitsbusinessnatureandvision,weexpectittoderiverevenueinthefuturefromcommissionsfromAlisports’onlineplatformandadvertisingincomefromsportingevents.
StrategyandValuePropositionDigitalizeandcreateaplatformforChina’ssportseconomy:Alisports’visionistodigitalizethetraditionalsportsindustrybyleveragingAlibaba’sdigitalassetsanduserdata.Alisportswillintegratethegroup’sassetsine-commerce,media,marketing,video,entertainment,cloudcomputingandAI,witheventmanagement,IP,businessdevelopment,ticketing,etc.,ofthetraditionalsportingindustry.
DevelopIPforforeignandhomegrownsportingcontent:AlisportsdevelopsandacquiresChineseandinternationalsportsIP,whichweviewasakeycompetitivestrength.Alibabapurchasedexclusivebroadcastingrights,aftertheendofnationalsportschannelCCTV5’srightstosportseventtransmissionandbroadcastsin2014.
Strategicpartnershipsformajorsportstournaments:Alisportshaspartnershipswithmajorinternationalsportsassociations—includingtheInternationalBoxingAssociation(AIBA),WorldRugby,IeSF(Internationale-SportsFederation)—topromoteandhosteventsinChina,aswellasbroadcastingrightsfortheFIFAWorldCup,NFLGames,OlympicGamesandLPGA.
AlisportsdevelopsandoperatessportsIP,sportingevents,e-sportscontests,sportingvenues,sportsmerchandiseandacquisitionsofselectedmediarights.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
PeersPeersincludeWandaSportsandTencentSports.WandaSportsisoneoftheworld’slargestsportscompaniesfollowingaseriesofacquisitions.
Source:sports.qq.com
MetricsAlisportsstreamedthe2016RioOlympicsviaYouku,Alibaba’svideostreamingportal,underalicensingagreementwithChinesestate-ownedCCTV.Asmanyas380millionviewersstreamedtheOlympicGamesthroughAlisports.
OutlookBeneficiaryofpolicysupport:China’sStateCouncilsetatargetthat,by2025,thesportsindustrywillhaveanoutputvalueof¥5trillion.Alisportsaimstobothprovideanonlineplatformforthetraditionalsportsindustryandtodigitalizeandupgradetheindustry.
E-sportsasamajorgrowthdriver:AlisportslaunchedtheWorldElectronicSportsGames(WESG)inMarch2016tofacilitatedevelopmentofe-sportsIP.AlisportsaimstoexpanditsofflineeStadium(venuesfore-sportstournaments)networkto10,000inthemediumterm.
Source:2017.wesg.com
Sportscommunityplatform:Alisportsaimstocreateanonlineplatformthatintegratespeople,associations,eventsandsponsors.
E-sportswillbeamaingrowthdriverforAlisports.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
YoukuTudou—VideoContentPlatform
Source:c.youku.com
BusinessOverviewYoukuTudouistheleadingoperatorofvideo-streamingservicesinChina.Theplatformenablesuserstosearch,viewandsharevideocontentacrossmultipledevices.ItwasformedfromthemergerofYoukuandTudouin2012,andwassubsequentlyacquiredbyAlibabain2015.TheYoukuBusinessDivisionispartofAlibaba’sDigitalMedia&Entertainmentarm.
Revenuemodel:YoukuTudouderivesasubstantialpartofitsrevenuesfromonlineadvertisingandpaidsubscriptions.YoukuTudoualsoworkswithAlibaba’sotherassetsforcontentgenerationandtrafficacquisition.
StrategyandValuePropositionGathersuseranalyticsforbettertargeting:Viewers’dataonYoukuisintegratedintoAlibaba’se-commerceplatformandhelpscreateprecisecustomerprofilesfortargetedadvertising.
Contentcreationandpartnerships:YoukuTudouhasdigitalcontentpartnershipswithDreamWorks,UniversalPictures,SonyPictures,ParamountPicturesandLionsgatetostreamtheirmoviesthroughTmallBoxOffice.
AcornerstonetoAlibaba’se-commercemediaecosystem:BrandscanleverageYoukuTudouforbrandingandmarketing,andtointeractwithcustomers.YoukuTudouhascreated“webisodes”onTaobaotousestorytellingtoboostsalesonTaobaoandtocombinevideoadvertisingandshopping.
MetricsYoukuTudouhas30millionpayingviewers,asofDecember2016.
YoukuTouduisChina’sleadingvideo-streamingservicesandispartofAlibaba’sDigitalMedia&Entertainmentdivision.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
PeersYoukuTudou’speersareChina’sleadingonlinevideoplatformssuchasiQiYi,Sohu,MangoTVandTencentVideo.
Source:iqiyi.com
OutlookPlatformstrategy:YoukuTudouwillplayakeyroleinAlibaba’sstrategyofbuildingan“e-commercemediaecosystem”,whichaimstoconnecte-commerceplatformswithmediaandletbrandsreachconsumersthroughdigitalchannels.YoukuTudouwillbecomethe“lifestylechannel”forAlibaba’se-commerceplatforms,togetherwithSinaWeiboandmobilebrowserproviderUCWeb.
Contentgeneration:YoukuTudouwilldistributeandgeneratecontenttohelpmakeAlibabaaleadingdigitalcontentproviderinChina.Alibaba’sgoalistoreach2billionconsumerswithitsservicesby2036,bycontinuingtoexpandbeyonde-commerceintoentertainment,mediaandsports.AlibabaisasponsoroftheOlympicGamesthroughto2028,andthegamesareexpectedtobestreamedonYoukuTudou.YoukuTudouhasexistingpartnershipsoncontentgenerationwhichitcanleverage.
OnlinedistributionchannelforAlibaba’smediaandentertainment:YoukuTudouisakeydistributionchannelforAlibaba’smediaandentertainmentunit.China’sonlinepaidvideomarketwasvaluedat¥9.6billionin2016,anincreaseof90.8%yearoveryear.Accordingtoasurveyin2016,82%ofChineseprefertowatchnewfilmsononlinevideoplatforms,morethanthe66%whoprefertogotocinemas.
Alibaba’sgoalistoreach2billionconsumerswithitsservicesby2036,bycontinuingtoexpandbeyonde-commerceintoentertainment,mediaandsports.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
UCWeb—MobileInternetServices
Source:uc.cn
BusinessOverviewUCWeboperatesUCBrowser,oneofthemostpopularmobilebrowsersglobally.SimilartoGoogleChromeandAppleSafari,UCWebhasbothmobileandPCversions.UCWebwasfoundedin2004,andacquiredbyAlibabain2014,aspartofthe“cloud+terminal”businessstrategy.
UCBrowserhastransformedintoaleadingcontentdistributionplatformfromitsoriginsasamobilebrowser.ItsportfolioincludesUCBrowser(mobilebrowsingservice),UCNews(contentdistributor),9Apps(Androidappstore)andUCUnion(mobiletrafficandmonetizationplatform).
Revenuemodel:Theprimaryrevenuesourcesarefromadvertisementsandpartnershipswithnetworkoperatorstotrackanalytics.
StrategyandValuePropositionLocalizationstrategy:UCWebhasalocalizationstrategy.IthasalargeuserbaseinChina,andcontrolsmorethanhalfoftheIndianandIndonesianmarkets.Thebrowsersupports12languagesinordertoserveitsgrowinginternationaluserbase.9Apps,itsmobileappdistributionplatform,wassetupin2013andallowsAndroidusersgloballytodownloadapps.
Ecosystempartnerships:UCWebhaspartnershipswithandprovidesdistributionchannelsforcompaniessuchasVodafone.Ittakesadvantageofitsownservernetworkstodelivertargetedadvertisingandcontenttousers.
Pairingcontentdistributionwithsophisticateddataanalytics:UCWebisevolvingintoamoreintelligentplatformthatintegratesuserdataanalyticsandmultimediacontent.Itanalyzesusers’location,agegroup,genderandintereststoprovidetargetedcontent.
ContentcreationandaconnectortotheAlibabamediaecosystem:UCBrowserconnectsuserstotheAlibabamediaecosystemofe-commerce,musicandvideostreaming,andsocialnetworks.UCWebhascontentpartnershipswithonlinemediaportalssuchasSinatoextenditsreachtomoreconsumers.Mediaportalsandpublisherscancreate“contentstores”
UCWeb,whichoperatesUCBrowser,wasacquiredbyAlibabain2014.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
onUCBrowsertohousetheircontent.UCoperatesWe-Media,anopenplatformwhichallowsinternationaluserstopublishandpostcontent.UCalsoestablishedthe¥1billionW+fundtorewardcontributorsinChina.
KeyMetricsUCBrowserhasover252millionMAUsglobally,asofSeptember2016accordingtoQuestMobile.ItisthelargestmobilebrowserinIndia,witha57%marketshareandover100millionMAUsin2016.83%ofitsusersarebelowtheageof35,andover60%liveintop-tiercities.
PeersUCBrowser’sdomesticpeers(mobile)includeQQbrowser,Baidu,360andSogou.
Source:mb.qq.com
Globally,UCBrowser(desktop)isrankedthirdwithan8%marketshare,behindChrome(52%)andSafari(15%),accordingtoStatCounter.
OutlookFurtherrampupdigitalcontentgeneration:UCWebwillbesteppingupitscontent-generationeffortsbypartneringwithmoremediaoutlets,inadditiontopayinguserswhocontributecontent.WiththeuseofbigdataandAI,UCWebwillhelpimprovedistributionoftargetedcontent.
Overseasexpansionstrategy:UCWebaimstomakeUCWe-Mediathego-toplatformforcontentconsumptionandcreationinIndiaandIndonesia.UCWebhassetupaninvestmentfundofRs200crore(overUS$30million)tostrengthenuser-generatedcontent(UGC)inIndiaandIndonesia,andnewsdistributionthroughUCNews.In2017,itplanstoaddmorethan30,000self-publishersandbloggerstoitsplatform,andpursuemoretie-upswithIndianentertainmentchannelsandmoviemakersforexclusivecontentreleases.
Furtherinvestmentsintechnologyandplatforms:UCWebislookingatinvestmentsinupstreamanddownstreamareasincontentgenerationanddistributioninIndia,includingthoseengagedinlocal-languagecontent.
UCWebisfocusedonoverseasexpansionwithinvestmentinIndiaandIndonesia.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Innovative Initiatives
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DingTalk—EnterpriseMessagingPlatform
Source:dingtalk.com
BusinessOverviewDingTalkisanenterprisemessagingplatformaimedatimprovingB2Bcommunicationsandcollaborationforsmall-andmedium-sizedenterprises(SME)andorganizationsinChina.DingTalkwasfirstlaunchedin2015andiscurrentlytheNo.1rankedenterprisemessagingappinChina.
TheDingTalkmobileappprovidesenterprisefunctionssuchasgroupandpersonalinstantmessaging,videoandvoiceconferencecalling,e-mailandcloudstorage.Italsosupportsinternalandexternalbusinesscollaborationsthroughfunctionssuchassmartreportforms,attendanceandapprovaltrackingsystems,etc.
Revenuemodel:DingTalkiscurrentlyofferedfreeofcharge.
StrategyandValuePropositionEquippedwithfunctionstoincreasetheefficiencyofSMEs:DingTalkwascreatedtoincreasetheefficiencyofSMEsinChina,andwasdesignedwithuniquefunctionsthatmaketheapppopularamongcorporateusers.Forexample,DingTalkreturnsalistofstaffwhohaveorhavenotseenacertainannouncement.ThesefunctionsdifferentiateDingTalkfromitscompetitorssuchasEnterpriseWeChatandYonyou.
LeveragesAlibaba’splatformtogeneratevalueforusers:DingTalkprovidesmanyvalue-addedservicestoitscorporateusers,thankstoitssynergieswiththerestofAlibaba’splatforms.InMarch2017,DingTalkprovided¥1billioninsubsidiestoitscorporatesusersintheformofshoppingcouponsonTmall,etc.ThisstrategyshouldhelpDingTalkincreaseitsmarketshare.
DingTalkisanenterprisemessagingplatformaimedatimprovingB2BcommunicationsandcollaborationforSMEinChina.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Endorsementfromgovernmentauthorities:OrganizationsinthepublicsectorinChinaareDingTalk’sfifth-largestclientcategory,asofMarch2017,whichshouldhelptomarkettheappeffectively.TheHangzhouEconomicandInformationTechnologyCommissionopenlyendorsedDingTalkbyencouragingotherdepartmentstousetheapptoimplementthegovernment’s“Internet+Administration”initiative.
PeersDingTalk’speersinthemanagementandcollaborationapplicationspaceinChinaincludeEnterpriseWeChat,Yonyouand263Cloud.
Source:yonyou.com
Source:263.net
KeyMetricsDingTalkhasreached3millioncorporateusers,asofFebruary2017.
DingTalkhas3millioncorporateusersasofFeb2017.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Figure5.DingTalkSWOTAnalysis
S • Stronginfrastructuresupport• StrongR&D,professionalexperience• LeadingpositioninSaaSecosystembuilding W • Inconvenientbackendstatisticsfunction
O • Strongdemandforcollaborationplatform• RapidgrowthofSMEs T • Intensecompetition
• FragmenteddomesticSaaSmarket
Source:Analysys
OutlookHugepotentialinChina’scorporateSaaSmarket:Thecorporatesoftware-as-a-service(SaaS)marketinChinaisintheearlystagesofdevelopmentandisstillfragmented.WeexpectDingTalktodominateChina’sSaaSbusinessservicesindustryinthefuture,giventhesupportofAlibaba’sstrongdatatechnologyandcloud-computingcapability.
Expansionintootherverticals:DingTalkwilllikelyexpandfurthertootherapplicationsinordertobringmorevaluetoenterpriseusers.
RevenueopportunitiesforDingTalk:WeexpectDingTalk’sfuturerevenuemodeltoeitherbebasedonvalue-addedservicesorasubscriptionmodelsimilartootherSaaSappsintheUS.
Figure6.China’sSaaSMarketAnalysis
Source:iResearch
• Developmentofcloudtechnologyhasbegun
• Adequateprofessionalresources
• Corporateshavegraduallybeguntoacceptcloudservice
• Thepotensalmarketishuge
• TheonlineeconomyinChinawasworthover¥1.5trillion,asof2016.
• SaaSispreferredbycorporatesforitslowcost
• Govermentpolicyhasendorsedcloudcompusngandinternetstrategy Policy
Economy
Technology
Society
Alibaba’sdatatechnologyandcloud-computingcapabilitywillbeabletosupportthedominanceofDingTalk.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
YunOS—Cloud-BasedOperatingSystem
Source:yunos.com
BusinessOverviewYunOS(alsocalledAliyunOS)isanInternetofThings(IoT)operatingsystemthatbringscloudfunctionalitytoIoTandmobiledevices.ItwasfirstintroducedbyAliCloudin2011.
YunOSwasbuilttoworkinacloudenvironment:devicescansynchronizedatafromthecloudanduserscanaccessapplicationswithouthavingtodownloadtotheirdevices.
Revenuemodel:Alibabadevelopsandsellscloud-basedservicesonYunOS.ItdoesnotchargelicensingfeestohardwaremanufacturerswhoinstallYunOSontheirproducts.Instead,Alibabasharesintherevenuesderivedfromtheseproductsanditscloudservices.Themorepopularaservicebecomes,thefasterthesystem’suserbaseexpandsandthehighertherevenueshareforYunOS.
StrategyandValuePropositionHighlycompatibleandIoTfocused:Comparedtootherdomesticoperatingsystems,YunOSemphasizescompatibilityandtheconceptof“connectingallkindsofdevices.”YunOScanbeadoptedinsmartphones,smartcars,wearables,smart-homeappliancesandothersmartdevices.YunOSisanopensourceoperatingsystemthatallowsthird-partydeveloperstobuildtheirownservices.
Source:yunos.com
YunOSisInternetofThings(IoT)operatingsystemsthatbringcloudfunctionalitytoIoTandmobiledevices.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
CriticalmassinChina:YunOSisthesecond-largestoperatingsystemforsmartphonesinChinaandisaheadofAppleiOS.YunOS-installedsmartphonescomprisedanestimatedmarketshareof14%oftotalshipmentsinChina,asoftheendof2016.
Extensiveusecases:YunOSisusedtoenhanceconsumers’shoppingexperiencebothatphysicalstoresandonline.Forexample,theYunOS-poweredvirtualmirrorwithface-recognitionalgorithmallowsuserstoseetheeffectsofdifferentcosmeticsusingsoftware.
KeyMetricsYunOShasover70millionmobilephoneusersandover100milliontotalusersacrossallplatforms,asoftheendofMay2016.
Anestimated100millionYunOS-poweredsmartphoneswereshippedin2016,accordingtoStrategyAnalytics.
YunOSisthesecond-most-popularsmartphoneOSinChina,witha14%marketshare,asoftheendof2016.Androidhasoveran80%marketshare,whileiOShasa6%marketshare.
PeersYunOSisaheadofitsdomesticpeersintermsofIoToperatingsystem.Otherdomesticpeersinclude:
TencentOperatingSystem(TOS+)isanOSforconnecteddevicessuchasTVsandwearables.
Source:bbs.tos.cn
FreemeOS,byDroiTechnology,isanAndroid-basedOSforbothsmartphonesandwearabledevices,launchedin2012.TheOScurrentlyhas95millionusersglobally.
MIUIisanAndroid-basedsmartphoneandtabletcomputerOSdevelopedbyXiaomi.ItmainlysupportsXiaomiproducts,andisalsoopenforotherbrands.TheOScurrentlyhasover200millionusers.
YunOSisthesecond-largestoperatingsystemforsmartphonesinChinaandisaheadofAppleiOS,withover70millionmobileusersasofMay2016.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:miui.com
BaiduYi,theAndroid-basedOSdevelopedbyBaidu,wassuspendedin2015.
EUIisanOSdevelopedbyLeTVforsmartphones,TVs,automobilesandsmartdevices.
OutlookAlibabawilllikelycontinuetodevelopanintegratedIoToperatingsystemtogenerateadditionalrevenuestreams.
Thegoalistobecometheindustrystandard:Alibaba’sgoalisforYunOStobecometheindustrystandardfortheglobalsmartdeviceindustryaswellasthe‘go-to’operatingsystemforChina’ssmartdeviceindustry,accordingtoaYunOSproductdirector.
HugepotentialforIoTinChina:China’sIoTmarketisexpectedtoreachUS$121.5billionby2022,representingacompoundannualgrowthrate(CAGR)of41.1%between2016and2022.Theprimarygrowthdriversareincreasingindustrialautomation,mainstreamadoptionofcloudcomputingandincreasingmobileinternetpenetration.
Expansionintodifferentproductverticalsthroughpartnerships:AlibabahasbeenworkingwithinternationalhardwaremanufacturerssuchasHPandIntelon“YunOSBook”tablets.ItiscooperatingwithSharp,Haier,LenovoandSkyworthtoproducesmartTVswithYunOSinstalled.Alibaba’sRX5SUV,an“InternetCar”withbuilt-inYunOSwithSAICMotor,wasreleasedinJune2016.Thesmartcarisabletocommunicatewithothervehicles,andbusinessesandcanfindparkingspaces,locategasstationsandpayforserviceswithAlipay.
Overseasexpansion:ThenextstageofgrowthforYunOS-poweredmobiledevicesisurbanChinaandoverseas.TheglobalOSmarketisledbyAppleandGoogle.Currently,YunOSismainlyinstalledonlower-endsmartphones.AnypushtoexpandoverseaswillrequirestrongtechnicalfeaturesandincreasedR&Ddeployment.
Alibaba’sgoalisforYunOStobecometheindustrystandardfortheglobalsmartdeviceindustryaswellasthe‘go-to’operatingsystemforChina’ssmartdeviceindustry
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AutoNavi—DigitalMap,NavigationandLocation-BasedServices
Source:autonavi.com
BusinessOverviewAutoNaviisadigitalmapandnavigationsolutionsproviderinChinathatwasestablishedin2001andacquiredbyAlibabain2014.AutoNaviisanoperatingpartnerofGoogleMap,BingMapand360MapintheChinesemarket,andthedataproviderforAppleMaps.TheAutoNavisystemsupportsfunctionssuchasARvisualnavigation,3Dlandscape,cloudsync,real-timetrafficconditions,offlinenavigation,etc.
Revenuemodel:Thebasicnavigationfunctionisfreeofcharge.Thenavigationappmainlygeneratesrevenuefromvalue-addedservices:
• CommissionearnedfromLBSservices:Theappprovideslocation-based-services(LBS)toserviceproviderssuchascar-hailingcompanyDidiChuxing.AutoNaviearnscommissionsfromconnectingserviceproviderswithusers.
• Advertisingincome:AutoNaviauctionsadvertisementspotsinsideitsapptobusinesses.
StrategyandValuePropositionIncreasedaccuracyofLBSthroughuser-generatedcontent:AutoNavicapturesusers’drivingpatternsinreal-time,poweredbybigdataandcloudcomputing.AutoNavialsocollaborateswithpoliceandtransportadministrationofficestocapturedatarelatingtotrafficincidents,whichincreasestheaccuracyofthereportingofreal-timeroadconditionstoover90%.AutoNavicollectsusers’datatoprovidepersonalizedofflineservicesandrecommendnearbyrestaurants,gasstations,entertainmentfacilities,etc.AutoNavihashaditscoresystemonAliCloudsinceJanuary2016.
Constantlyenhancecapabilitiestocreatevalueforusers:AutoNavihasextendedthemodesoftransportavailableontheapptofiveafterincludingtrainsandcycling.Itisalsocustomizingsolutionsbasedoneachuser’spreferenceandspendingpatterns,andhasbeenactiveinpartneringwith
AutoNaviisadigitalmapandnavigationsolutionsproviderthatwasacquiredbyAlibabain2014.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
othercompaniestoextenditsbusinessscope.AutoNaviwillgeneratemapsforautomateddrivingprojectsunderpartnershipswithGermanautomobilesupplierBoschandChinese-languageinternetsearchproviderBaidu.
Increaseentertainmentvaluewithcelebrityvoicenavigation:AutoNaviprovidesvoicepromptedturn-by-turnvoicenavigationthatisrecordedbycelebrities,includingTaiwaneseactress,LinChi-lingandChinesecomedianGuoDegang.AutoNavisawa230%increaseinfirst-timeuserswhenthisfunctionwasreleased.
PeersMobilenavigation:AutoNaviandBaiduMaparethetop-twonavigationappsthatdominatethedomesticmarket.
Source:BaiduMapIOSApp
Figure7.ChinaMobileNavigationUserPenetrationRate,asof3Q2016
Source:Analysys
MetricsAutoNavihad29millionmonthlyactiveusers,asof2016.
6.0%
6.2%
8.9%
42.8%
71.5%
0% 20% 40% 60% 80%
TianyiNavigason
TencentMap
ChinaMobileMap
AutoNavi
BaiduMap
AutoNavihad29millionmonthlyactiveusers,asof2016.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
OutlookDominanceinthedomesticmarket:WebelieveAutoNaviwillcontinuetoleadinthedomesticmappingmarket,givenitssuperiorservicequalityandreal-timetrafficinformationpoweredbybigdata.
Source:auto.amap.com
Futureplans:AutoNaviisdevelopingamodeltopredictfuturetrafficconditions.Beyondnavigationandtrafficdata,futureareasoffocus—knownasits“FourVehiclesStrategy”—includeinternetofvehicles,auto-drivemaps,trafficbigdataandopenplatformservice.WeexpectAutoNavitopursuefurtherstrategicpartnershipopportunities.
PolicysupportforChina’sautonomousvehiclemarket:Chinaaimstohaveautonomousvehiclesontheroadby2021.ThepolicyopensanewopportunityforAutoNavisinceatrafficdatabaseandcompletenavigationfunctionsarekeyelementsofanautonomousvehicle.ThecompanyhasalreadyenteredintoapartnershipwithGermany’sRobertBoschonautonomousvehicledevelopment.Weexpectfurtherstrategiestobeimplementedtoincreasethecompany’spresenceintheautonomousvehiclemarket.
AutoNavi’ssuperiorservicequalityandreal-timetrafficinformationpoweredbybigdataallowittoleadinthedomesticmarket.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AlibabaHealth—OnlineHealthcarePlatform
Source:alihealth.cn
BusinessOverviewAlibabaHealthInformationTechnology,orAliHealth,isthehealthcarearmofAlibabathatwasformedfromitsacquisitionofCitic21CNin2014.Thecompany’sobjectiveistousetechnicalcapabilitiestoimprovehealthcareservices.AliHealthhasanonlinehealthinsurancejointventuretobuildanonlinecommunityfortheChinesehealthcaremarket.ThecompanytradesontheHongKongStockExchangeundertheticker241HK.
AliHealth’smainrevenuestreamusedtocomefromtheoperationoftheChinaDrugAdministrationOnlineSystem,anonlinedrugtrackingandpharmacyonlinesystemthatletsuserstrackdrugproductionanddistributioninformation.However,thesystemwassubsequentlysuspendedin2016.
StrategyandValuePropositionCreatevalueacrosstheentiremedicalindustrychain:Alibabaaimstoconnectpatients,pharmaciesanddoctorsbybringinghospitalservicesonlineandtobuildaninternetpharmacythroughAliHealth.AliHealthhasintroducedtheAliHealthmobileapptoprovideonlinehealthconsultationservicesbyhealthcareprofessionals.
Affordablehealthcareaccessibletoall:AliHealth’smissionistomake“goodhealthachievableatthefingertipsofall”anditsvisionistoprovide“fair,affordableandaccessiblemedicalandhealthcareservicesto1billionpeople.”Inpursuitofthismission,AliHealthhasstrivedtodeveloppharmaceuticale-commerce,intelligentmedicineandproduct-trackingsystemservices.
AliHealthisthehealthcarearmofAlibabaaimstousetechnicalcapabilitiestoimprovehealthcareservices.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
PeersBaiduDoctorisanonlineplatformthatletspatientsbookmedicalappointmentswithdoctorsinlocalhospitals.BaiduDoctorhasanAI-poweredchatbottosendresponsesonbehalfofdoctorsafterthedoctorshaveverifiedtheinformation.
TencentDoctorconnectsdoctorsandpatientsthroughitsinstantmessagingappWeChat.Registereddoctorsandmedicalorganizationscanprovidepaidmedicalconsultationservicesthroughtheplatform.
Source:doctor.qq.com
KeyMetricsAsofMarch2017,morethan5,000enterprisesfromthedrug,foodandnutritionalsupplementindustrieshadsigneduptojoinAliHealth’sMaShangFangXinplatform,whichoffersproduct-trackingservicesforqualityassurance.MorethanhalfofthepharmaceuticalmanufacturersinChinahavesignedup.
OutlookAliHealthwillneedtofindasustainablebusinessmodelandworkwithdifferentstakeholderstoalignwithpolicyinitiatives.
China’spromisingdigitalhealthindustry:Overthelongterm,Chineseauthoritieswilllikelysupporttheonlinehealthcaremarkettoalleviatetheburdenonthepublicsystem.Pharmaceuticale-commerceinChinaisatanascentstageofdevelopment,comprisingapproximately3%ofpharmaceuticalsalesinthecountry,withhugepotentialforfurthergrowth.
Regulatorysupport:AliHealthwillneedtofindasustainablebusinessmodelandworkwithdifferentstakeholderstoalignwithpolicyinitiatives.TheChinesegovernmenthasimplementedanumberofhealthcarereforminitiativestoencouragetieredmedicalconsultationandtreatment,andfordoctorstopracticeatmultiplelocations
Morethan5,000drug,foodandnutritionalsupplemententerpriseshavesigneduptojoinAliHealth’splatformthatoffersproduct-trackingservicesforqualityassurance.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Others–Local Services and Enabling Functions of Commerce
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Koubei—O2OLocalServices
Source:koubei.com
BusinessOverviewKoubeiisanopenplatformforcustomersandmerchants,andasearchenginethatprovidesinformationonlocalservicessuchasrestaurants,fooddelivery,movieticketing,shopping,travelling,etc.KoubeiwasformedfromajointventurebetweenAlibabaandAntFinancialServicesin2015andisintegratedwithinAlipay.
Revenuemodel:Koubeidoesnotchargeservicefeestomerchantsonitsplatform.Ittakespartofthecommissionthatthird-partymarketersreceiveforsuccessfullypromotingamerchant’sservicestoconsumers.
StrategyandValuePropositionEmpowersbothonlineandofflinemerchants:Koubeiempowersmerchantswithpayment,marketing,customerserviceanddataanalyticsfunctionstohandletheirday-to-dayoperations.Ithelpslocalmerchantsretaintheirexistingclientsandattractnewcustomers.Forexample,Koubeioffersdealsandcouponstoencourageuserstospendatphysicalstores.
LeveragesAlibaba’secosystem:VariousfunctionswithinAlibabahelpdrivetraffictoKoubei,includingtheTaobaomobileapp,Alipay,AutoNavi,WeiboandUCBrowser.Forexample,KoubeiusestheAutoNavimaptechnologytorecommendlocalmerchantssuchasrestaurants,supermarketsandconveniencestorestousers.Alipayservesasachannelforpayment,loyalty,promotionsanddatacollectionfromusers.
Enliststhird-partymarketerstoonboardmerchants:Koubeirecruitsmarketersthroughthe“Koubeike”programtoonboardlocalmerchantsandrestaurantstotheKoubeiplatform.Theseinterestedthird-partymarketersearnacashcommissionandcoupons,andKoubeibenefitsfromagrowingmerchantbase
ArrayoftechnologiesembeddedinKoubei:Koubeihelpslocalmerchantscreatevirtualstoresforconsumerstobrowsethroughmerchandise,payandreceivediscounts.Consumerscanaccessthevirtualstorebyscanningthemerchant’sQRcode.TheKoubeimobileappalsointegratesARtechnologyinordertoletuserseasilydiscoverlocalservicesintheirvicinity.
KoubeiisajointventurebetweenAlibabaandAntFinancialthatofferasearchengineforcustomersandmerchants.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
PeersDianping(⼤众点评)isalocalservicesappbackedbyTencentthatcurrentlydominatesChina’sO2Oindustry.
Source:dianping.com
Ele.meisaFooddeliveryservicebackedbyAlibabaandTencentthataimstodigitalizethecateringindustry
KeyMetricsKoubeihas1.5millionthird-partyserviceproviders,handlinganaverageof15milliontransactionsdaily,andhasapresencein120cities.
Koubeigenerated¥73.1billion(US$10.5billion)inpaymentvolumetransactedthroughAlipayduringthequarterendingDecember2016,representinga52%increaseoverthepriorquarter.
OutlookCompetitivedomesticO2Omarket:KoubeifacescompetitionfromthemarketleaderDianpinginthedomesticmarket.AccordingtoTrustdata,thetotalturnoverofthefourlargestChina’slocallifeserviceO2Obrandswas¥550trillion.Meituan-Dianpingaccountedfor44%,followedbyKoubei’s31%.Koubeiwilllikelyneedtospendontrafficacquisitioninordertowinmarketshare.
Overseasexpansion:Online-to-offlinee-commerceplatformKoubeihelpedboostsalesatoverseasphysicalstoresduringtheDouble12festivalin2016.Over70,000physicalretailersin16countries—includingduty-freeshops,supermarketsanddepartmentstores—participatedinthefestivalthroughKoubei.
Supportsthegroup’sNewRetailstrategy:KoubeiwillplayanimportantroleinimplementingAlibaba’sNewRetailstrategyastheplatformdirectsonlinetrafficoffline,boostingofflinestoresales.UserscansearchforlocalmerchantsusingKoubeiandthenvisitthestorestotakeadvantageofpromotions.
Koubeihas1.5millionthird-partyserviceprovidersandgenerated¥73.1billioninpaymentvolumeonAlipayinthequarterendingDecember2016.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
CainiaoNetwork—AffiliatedLogistics
Source:global.cainiao.com
BusinessOverviewCainiaoNetworkisanasset-light,logisticsdataplatformthatdrivesefficiencybyconnectinge-commercecompanieswithlogisticscompaniestoprovidefulfilmentonalargescale.Cainiao’splatformspansdelivery,warehouse,pick-up,andruralandcross-borderlogistics.Cainiao’slogisticsplatformincorporatesover20logisticsfirmsgloballyandleveragesbig-datatechnology.CainiaoNetworkwasestablishedin2013andisa47%-ownedlogisticsaffiliateofAlibabaGroup.
Revenuemodel:CainiaoNetworkgeneratesrevenuefrombusinessone-commerceplatformsandlogisticscompanies.
• E-commercebusiness:CainiaoNetworkchargesservicesfeesforprovidingstorageanddistribution,cross-bordertransportationandacomprehensivelogisticsservice.
• Logisticscompanies:CainiaoNetworkchargescommissionstologisticscompaniesforprovidinglogisticssolutionsbasedonitsbig-datasystemandlogisticscloud.
StrategyandValuePropositionAlignedtothegroup’sholisticapproachtocommerce:CainiaoNetworkfulfilsthelogisticsaspectofAlibaba’sholisticandtechnology-drivenapproachtocommerceforitsstakeholders.Inaddition,Alibabaisabletoaddarevenuestreamfromitsthird-partylogisticsnetworksbychargingservicefees.
Advantagesofaplatformapproach:Cainiao’sdata-drivenlogisticsplatformhasseveraladvantagesoverthetraditionallogisticsmodel,asitintegratesexistinglogisticsresourcesandempowerspartnerswithincreasedlogisticsefficiency.Theplatformapproachgivesstakeholdersadegreeofcontrolwithouthavingtodeveloptheirownlogisticsoperationsin-house.
Speed:CainiaoNetwork’sgoalistodeliveranywhereinChinawithin24hours,andworldwidewithin72hours.Theplatformadoptsstandardizede-shippinglabelstoreduceorder-processingtimeandasmart-routingservicebasedontheanalysisofreal-timeaggregatedindustrydeliverydata.
Cainiaoisanasset-lightlogisticdataplatformthatconnectse-commercecompanieswithlogisticscompaniesthatprovidefulfillmentservices.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Value-addedservices:Theplatformenablesmerchantstooptimizedemandvolatilityandseereal-timeinformationondeliveryoptions,pricesandtime.Alibabaprovidesdataintelligenceandforecastsparceldemandvolatilitybyanalyzingconsumertransactiondata.ConsumersareabletotrackdeliveriesontheirmobileTaobaoapp,whichfulfilstheirdemandforconvenience.
PeersCainiaoNetwork’sdomesticpeersinclude:
Self-ownedlogisticsnetwork:JDLogistics,SuningLogistics,Amazon.cn
Source:wuliu.suning.com
Networkoflogisticsproviders:PinjunExpress
KeyMetricsCainiao’snationwidefulfilmentnetworkhassevenregionalhubstoservedeliverycoverageofover2,700countiesanddistricts,asofMarch2017.Foritsglobalfulfilmentnetwork,itcovers224countriesandregionswithover100overseaswarehousesandover60cross-borderpartners,asofMarch2017.
OutlookRisingdomesticlogisticsdemand:Theriseofe-commercehasdriventhegrowthofChina’slogisticsindustry,andbroughtwithitoperationalchallenges.InChina,anaverageof57millionpackagesweredeliveredeachdayin2015(vstheUSaverageof35million),whichisexpectedtoincreaseto145millionby2020.ThetimingofpromotionalactivitiessuchasSingles’Daycausesaspikeinlogisticsdemandandburdenslogisticspartners.
Increasingefficiencyandreducingcosts:Bybuildinganintelligentandsharinglogisticsmodel,CainiaoNetworkaimstolowerthecostoflogisticsasapercentageofGDPto5%inthefuture,fromthecurrentlevelof16%.Alibabaplanstousetechnologytofurtherreduceinefficiency,forexample,throughtheadoptionofcloudservices.
Cainiaoaimstolowerthecostoflogisticsbybuildinganintelligentandsharinglogisticmodel.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AntFinancial—OnlineFinancialServicesProvider
Source:antfin.com
BusinessOverviewAntFinancialisanonlinefinancialservicesproviderandanaffiliatecompanyofAlibaba.ItwasrenamedfromAlipayin2014.ItsvisionistoleveragethepoweroftheInternetandbigdatatoprovideanecosystemofinclusivefinancialservicestoSMEsandindividuals.Tothisend,AntFinancialoperatesfiveprimarylinesofbusiness:
• Paymentproducts:Alipay
• Wealth-managementproducts:Yu’ebao,Zhaocaibao.
• Financing:AntCheckLater,AntMicroLoan,MYbank
• Insurance
• Third-partycreditrating:SesameCredit
AntFinancialhasalsopartneredwithleadingfinancialinstitutionsincludingBankofChina,ChinaConstructionBank,AgriculturalBankofChinaandtheIndustrialandCommercialBankofChina.IthasalsopartneredwithO2Olocalservicestoprovidepaymentservices.
RevenueModel:TheprimarysourcesofrevenueforAntFinancialinclude:
• CommissionsandinterestreceivedfromAlipay
• Servicefeesfromwealth-managementproducts
• Interestincomefromindividualandcorporateloans
• Premiumincomefrominsuranceproducts
StrategyandValuePropositionNetworkeffectsandahugeuserbase:AntFinancialbenefitsfromahugeuserbasewhichservesasthefoundationofitsbigdata,andprovidesanedgeindevelopingandlaunchingnewservices.Thereare520millionregisteredAlipayusers,asofMarch2017.
Leadingbreadthandscaleacrossthefinancialservicesspectrum:AntFinancialpossessesstate-of-the-arttechnologiestopoweritsfinancialproductsandcontinuouslyimproveusers’experience.Forexample,theMYbankloansystemautomatesloandecisions;ZhemaCreditcreatespersonalcreditscoresbasedonanindividual’sprofilegatheredbybigdata;
AntFinancial,anaffiliateofAlibaba,isanonlinefinancialservicesproviderthataimstoprovideanecosystemofinclusivefinancialservicestoSMEsandindividuals.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
andAntFinancialCloudisanopenplatformbasedonAlibabaCloudinfrastructureandcustomizedforfinancialpurposes.
Focusedonservingindividualsandsmallbusiness:AntFinancialisfocusedonprovidingequitableaccesstofinancialservicesforthoseindividualsthatareunderservedbytraditionalfinancialinstitutions.ThisstrategyofinclusivefinanceenablesAntFinancialtogaintractionamongitstargetgroupsquickly.
TailwindformobilepaymentproviderasChinagoescashless:AntFinancialiswellpositionedtobenefitfromChina’sentryintothecashlessera.NotonlydoesAlipayhavethelargestshareinthemobilepaymentsmarket,itsgoalistobringChinaintoacashlesserawithinfiveyearswiththeestablishmentofacashlessalliance.Alipayhasestablishedpartnershipswithretailerssuchasairports,restaurants,supermarketsandtransporttosupportmobilepaymentwiththeaimtopenetrateeveryfacetofcompanies’activities.
PeersAntFinancial’speersinclude:
Domestic:JDFinance,Tencent’sWeChatPay,commercialbanks
Source:pay.weixin.qq.com
Overseas:Paypal
Source:paypal.com
AntFinancialiswellpositionedtobenefitfromChina’sentryintothecashlessera.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
KeyMetricsAntFinancialserved520millionannualactiveusersanditsstrategiclocalpartnersserved112millionannualactiveusersglobally,asofMarch2017.
OutlookBrandedasatechfincompany:AntFinancialplanstofocusonbuildingatechfinplatformtoconnectconsumersandsmallbusinesseswithfinancialinstitutions.AntFinancialisdrivinginnovationssuchastheshiftfrompasswordstobiometricsIDinordertomakepaymentsmoreconvenientandsecure,andtheuseofblockchainsincharitabledonationsandinsurancetobuildtrust.
Continuetostrengthenruralfinance:AntFinancialcontinuestopushforexpansioninruralareasaspartofitsinclusivefinancestrategy.Thecompanyprovidesloansforfarmersandcooperateswithagricultureandstockbreedingcompanies.AntFinancialwillalsointroduceruralsupply-chainfinancesolutions,O2Olocalservicesandadigitalizedloanplatformtoitsruralfinancestrategy.
Globalization:AntFinancialaimstoincreasetheproportionofitsoverseasusersto50%withinfouryearsanditsentireglobaluserbaseto2billionwithinnineyears.Thecompanyisactivelyincreasingitsglobalpresencethroughoverseasinvestmentsandpartnerships.
Figure10.AntFinancial’sRecentPartnershipsandInvestmentActivities
Source:360doc/FGRT
Date Event
August2016 PartnershipwithIngenicoGroupinFrance
July2016 LaunchedAlipay+projectinSingapore
June2016 InvestmentinAscendMoneyinThailand
May2016 CooperationwithUberglobally
November2015 InvestmentinK-BankinKorean
September2015 InvestmentinCathayFinancialHoldingsinTaiwan
September2015 InvestmentinPaytminIndia
AntFinancialisdrivinginnovationwithtechnologysuchasbiometricIDandblockchain.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Alipay—Third-PartyOnlinePayment
Source:alipay.com
BusinessOverviewAlipayisaleadingthird-partyonlinepaymentappdevelopedbyAntFinancial,anAlibaba-affiliatedcompany.Foundedin2004,AlipayprovidespaymentandescrowservicesfortransactionsonAlibabaplatforms.Alipayhassinceexpandedtootherverticalssuchasutilitybillpayment,onlineshoppingandfinancialproducts,includingpersonalloans,insurance,investmentfunds,etc.AlipayleadsChina’sthird-partypaymentmarketwitha53.7%share,inthefirstquarterof2017.
Revenuemodel:Alipayhasthreeprimarysourcesofrevenue:
• Interestincome:InterestincomecanbeearnedwhileproceedsoftransactionsaretemporarilydepositedinAlipay.
• Commission:Alipaychargesacommissiontomerchants.
• Advertisementfees:Alipayalsorentsadvertisingspaceonitsapp.
StrategyandValuePropositionGoaltoprovideinclusivefinancialservices:AlipayaimstoexpandaccesstofinancialservicestotheunbankedandunderbankedbymakingtraditionalbankingservicesaccessibletoallChineseandinternationalcitizens.Todothis,Alipayhasdevelopedarangeofservicesonitsplatform,startingwithanescrowfunctionthatinstillstrustbetweenconsumersandmerchantsandruralfinance.
Asingleplatformthataggregatesmultiplefunctionalities:InitiallydesignedtofacilitatetradesonAlibaba’smarketplaces,Alipaynowaggregatesarangeofservicesonitsplatform—includingonlinepaymentprocessing,digitalwallets,investmentproducts,dailyservicesforlocalamenitiesandmoneytransfers—intoasingleplatform.
Alipay,whichprovidespaymentandescrowservicefortransactions,isaleadingthird-partyonlinepaymentappdevelopedbyAntFinancial.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
• Investmentinfunds
Figure8.AlipayPlatform—SampleUses
Source:Alipaycompanywebsite
Leveragingbigdatatechnology:Alipayhasbeenpenetratingintomanyconsumptionscenariosandtouchpointstogenerateamorecomprehensiveprofileofitscustomers.Giventhehugevolumeoftransactionsitprocesses,AlipaycanfillthegapwhereamaturesystemforassessingconsumercreditriskislackinginChina.ConsumptionpatternscapturedbyAlipaytranslateintoSesameCreditscorestodetermineusers’creditworthiness.
AnimportantroleinNewRetail:Alipaywillplayakeyroleindirectingtrafficfromonlinetoofflineandgainingaccesstouseranalytics.AlipaydemonstrateditsprowessinsupportingphysicalmerchantsduringtheDouble12shoppingfestivalin2016.AlipayalsobuiltARtechnologyintoitsplatformfortheSpringFestival2017.ItdevelopedanewARgame,which,similartothesuccessfulPokémonGogame,alloweduserstohuntandopene-hongbao(digitalredpackets),whichgavethemaccesstoprizes,monetaryrewardsorexclusivecontent.AlipayhasalsobeenintegratedasapaymentoptionatthedepartmentstoresofBailianGroupandIntimeRetail,bothofwhicharestrategicpartnersofAlibaba.
Globalexpansion:Alipayisexpandingoverseasthroughacquisitionsandorganicgrowth.ThegroupacquiredSingapore-basedpaymentservicehelloPayin2017tofacilitateitse-commercebusinessLazadainSouth-EastAsia,andisintheprocessofacquiringUS-basedMoneyGram,theworld’sleadingmoneytransferservice,tofurtherincreaseitspresenceintheUSandinremittance.Thedealisexpectedtocloseinthesecondhalfof2017.AlipayhasexposuretotheChineseoutboundtravelmarketthroughitspartnershipswithoverseasmerchants,suchasHarrods,Selfridges,DFS,Macy’s,Nordstrom,etc.
Partnershipswithforeignbrandsonline:Alipayhasformedpartnershipswithoverseasmerchants,includingfashionandluxurye-commercesites,toserveChineseconsumers.TheePassprogram,establishedbyAlibabain2014,makesiteasierforChineseshopperstobuyforeigngoods,paythroughAlipayandshipusingAlibaba’sgloballogisticsnetwork.
EscrowPayment
BankingAccount
Transckons
Financing&InvestmentLifeServices
• Real-timemoneytransfer
• Foreignexchangetransactions
• MedicalConsultationRegistration
• UtilitiesBillPayment
Alipaywillplayakeyroleindirectingtrafficfromonlinetoofflineandgainingaccesstouseranalytics.
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PeersAlipay’sdomesticpeersinclude:• Tenpay(财富通):Tencent,whosepaymentinfrastructuresupports
WeChatPay,isthesecond-largestplayerafterAlipay.Asattheendof1Q17,Alipayhasa53.7%marketshareandWeChatPayhasa39.5%marketshare.
Source:tenpay.com
• ChinaUnionPay:AmajorbankcardschemeinChina.Itisthethird-largestpaymentnetworkgloballyafterVisaandMasterCard,intermsofvalueoftransactionsprocessed.
Source:cn.unionpay.com
Alipay’soverseaspeersinclude:• ApplePay:Apple’smobilepaymentanddigitalwallet
Source:apple.com/apple-pay
Tenpay,ChinaUnionPayandApplePayarethethreemajorpeersofAlipay.
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MetricsAlipayhas520millionactiveusersandsettled200milliontransactionsdaily,asofMarch2017.In2017,72%ofGMVonAlibaba’sChinaretailmarketplaceswassettledthroughAlipay.
OutlookThefuturegrowthofAlipaywilllikelybedrivenbyoverseasexpansionandcross-industrycollaboration,giventhehighpenetrationofmobilewalletsinChina.Some65%ofallmobileusersinChinausetheirphonesaswallets,thehighestpenetrationglobally,accordingtotheMinistryofIndustryandInformationTechnology.
Overseasexpansion:AlipayaimstoexpanditsglobalpresencetoallowChinesetouriststospendmoneyabroadbyusingAlipaytopayforpurchases.Alipay’soverseaspartnersincludeduty-freeretail,paymentprocessorsandluxurydepartmentstores.AlipaywillplayanimportantroleinAlibaba’sgoaltohelp1millionUSsmallbusinessesentertheChinesemarket.Therearecurrently7,000USbusinessesonAlibaba’splatforms.AlipayraisedUS$4.5billioninApril2016toexpanditsglobalpresencetenfold,bypartneringwith1millionofflinemerchantsoverthenextthreeyears.
Growththroughcross-industrypartnershipsandinvestments:WeexpectAlipaytocontinuetogrowitspaymentsecosystemthroughpartnershipsandinvestmentsincompanieswithwhichithassynergies.
Figure9.Alipay’sPartnershipsandInvestmentActivitiesSince2016
Event Date
PartnershipwithUber March2016
PartnershipwithSamsungPay March2016
InvestmentinMyntinthePhilippines February2017
InvestmentinKakaoPayinKorea February2017
AcquiredhelloPayinSingapore April2017
BidonMoneyGramintheUS April2017Source:FGRT
Regulatorybarriers:Alipaywillinevitablyencounterforeignregulationsasitexpandsoverseas.Theseregulatoryregimesmaybecomplexandrequireextensivetimeandresourcestoensurecompliancewithlocalregulations.
ThefuturegrowthofAlipaywilllikelybedrivenbyoverseasexpansionandcross-industrycollaboration.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
AlibabaCloud—ProviderofCloud-ComputingServicestoBusinessesandEntrepreneurs
Source:cn.aliyun.com
BusinessOverviewAlibabaCloud(AliCloud)isengagedinthedevelopmentofplatformsforcloudcomputinganddatamanagement.AliCloudoffersacompletesuiteofcloudandbig-dataservices,aswellasbusinessessolutionsingaming,e-commerce,IoT,mediaandotherindustries.
Revenuemodel:AliCloudchargesdifferentlevelsofpricingforitsproducts,andthepriceincreaseswiththesizeofthecapacitypackage.Prepaidandpay-as-you-gopaymentmethodsareavailable:prepaidcaterstolong-termusersandpay-as-you-gochargesusersforthefunctionsanddurationofusage,andoffersmoreflexibility.
StrategyandValuePropositionLeaderinthedomesticIaaSmarket:AliCloudistheNo.1publicinfrastructureasaservice(IaaS)providerinChina,withamarketshareofover50%.Thecompanyhascontinuouslymadetechnologicalbreakthroughsinprovidingever-highercomputingcapacity.TheMITTechnologyReviewrecognizedAlibabaGroup’s“Pay-With-Your-Face”systemandreinforcementlearningtechniqueinits2017toptechnologieslist.
Creatingvaluebysupportingotherbusinessunits:AlibabaGroup’svariousbusinessunitsbenefitfromthedevelopmentofitscloud-computingarmAliCloud.AliCloudpowersandincreasestheefficiencyofe-commerce,media,marketingandotheroperations.Forexample,AliCloudhelpedprocesshugesalesvolumesonitsannualshoppingfestivalSingles’Dayin2016,whichrecorded175,000transactionspersecondatitspeak.
Democratizingcloudservicesforstartupecosystemsandpublicservices:AliCloudhasbeenmakingAItechnologymoreaccessibletobusinessesandorganizationsthroughitsmachine-learningplatform.TraditionalbusinessescanmakeuseofAliCloud’sETprogram—includingIndustrialBrain,MedicalBrainandCityBrain—tosolvecomplexproblemsacrossdifferentindustries.AliCloud’sglobalstartupprogram,Create@AlibabaCloud,supportsstartupswithitssuiteofcloud-computinginfrastructureservices.In2017,the
AliCloudisengagedinthedevelopmentofcloudcomputinganddatamanagement.
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programwillbeexpandedtocoverMainlandChinaand12overseasmarketsandregions.
Globalexpansion:ThenumberofAliClouddatacentersgloballyincreasedto14,aftertheopeningoffournewdatacentersin2016—inDubai,Europe,AustraliaandJapan—asastrategicmovetoexpandglobally.ItisplanningtobuildnewdatacentersinMalaysia,IndiaandIndonesiathisyear.Thecompanyhasformedpartnershipswithforeignenterprises,suchasestablishingajointventurewithSoftbankinJapan.Alibabaalsoenteredintoa12-yearpartnershipwiththeInternationalOlympicCommitteetoprovidecloudservicestoOlympicevents,withthegoaltoimprovetheefficiencyoftheOlympicGamesthroughbig-dataanalytics.
PeersIaaSCloud:AlibabaCloudisthelargestcloudinfrastructureservicesproviderinChina,andiscurrentlyrankedfifthintheglobalcloudmarketintermsofcloudsales,accordingtomarketresearchfirmCanalys.
By2020,AlibabaCloudisforecasttotake7.8%oftheglobalpubliccloudmarket,whileAmazonWebServices,MicrosoftAzure,IBMandAlphabetInc(GoogleCloud)areexpectedtoaccountfor69.1%.
Source:azure.microsoft.com
MetricsAliCloudhasover874,000payingcloudcustomers,asofMarch2017,andatotalof2.8millionusers.
Infiscalyear2017,AliCloudgenerated¥6.7billioninrevenues,accountingfor4%ofthegroup’stotalrevenues.
OutlookSeekfurtherdomesticandoverseasgrowth:InordertocompeteeffectivelywithAmazonWebServicesandMicrosoftAzureintheglobalmarket,weexpectAliCloudtocontinuetostrengthenitsglobalexpansionandlocalizationefforts.ItintroducedaprogramcalledAliLaunch,whichencouragesthird-partytechcompaniestosellsoftwarebasedontheAliCloudinfrastructure.Theaimoftheprogramistodiscovermorerevenueopportunities.
Furtherextendcloudcoveragetomoreverticalsandindustries:WeexpectAliCloudtofurtherexpanditscoveragetomoreindustrieswithnewproductssuchasETIndustrial,CityandMedicalBrains.
AlibabaCloudisthelargestcloudinfrastructureservicesproviderinChina,andiscurrentlyrankedfifthintheglobalcloudmarketintermsofcloudsales.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Alimama—Data-DrivenMarketingTechnologyPlatform
Source:alimama.com
BusinessOverviewLaunchedin2007,AlimamaisaplatformthatprovidesmerchantsandbrandswithonlinemarketingservicesonAlibaba’smarketplacesandthroughthird-partymediaoutlets.
Alimama’svariousmarketingproductsinclude:
• TaobaoAdNetworkandExchange(TANX):Areal-timeonlinemarketingexchangethatautomatesthetransactionofadvertisinginventory.
Source:tanx.com
• Datamanagementplatform(DMF):Aplatformthatallowsmarketerstoidentifytargetedaudiencegroupsthroughbigdatabyimprovingdigitaladvertisingefficiency.
• TaobaoZhitongche(淘宝直通⻋):AmarketingservicethatreturnspersonalizedproductrecommendationsonAlibaba’smarketplaces—Taobao,TmallandJuhuasuan—fromkeywordsearchestoattracttargetedgroups.
Alimamaisadata-drivenplatformthatprovidesmerchantsandbrandswithonlinemarketingservicesonAlibaba’smarketplacesandthroughthird-partymediaoutlets.
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Source:zhitongche.taobao.com
• Diamond(智钻):AmarketingplatformthatdisplayscustomizedbannersandvisualadvertisementsacrossAlibaba’splatforms.Thecoverageofthemarketingplatformreachesover80%oftheentiredomesticonlineshoppingcustomerbase.
Source:zuanshi.taobao.com
Revenuemodel:Alimamamainlyderivesrevenueusingtwomethods:cost-per-thousandimpressions(CPM)andcost-per-click(CPC).
• CPM:Theservicefeeiscalculatedaccordingtothenumberofpeoplethattheadvertisementreaches.
• CPC:MostservicesarechargedonCPCbasis—abusinesspaystheservicefeeaccordingtothenumberoftimesacustomerclickstheadvertisement.
StrategyandValuePropositionHighlyaccuratetargetedadvertisingsupportedbybigdata:AlimamaleveragesthehugevolumeofdatacollectedbyAlibaba’secosystemtoaccuratelydisplaymarketingcontenttoconsumers.Thisincludestransactiondataonitsmarketplaces,paymentdataonAlipay,logisticsdatafromCainiaoNetwork,userbehavioraldatafromitsmediaentertainmentproperties,etc.Alimama’sdata-drivenbrandmarketingproduct,DharmaSword,helpsbrandstobettertargettheirintendedaudiences.
AlimamaleveragesthehugevolumeofdatacollectedthroughAlibaba’secosystemtoaccuratelydisplaymarketingcontenttoconsumers.
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UniMarketingplanforadvertisingacrosschannels:Alibaba’sUniMarketingstrategyhelpsbrands’marketingcontentreachconsumerseffectively.Alimama’sUniMarketingplanusesAlibaba’sbigdataoruserprofilestohelpbrandsreachpotentialbuyersacrossallmarketingchannels.AlimamacooperateswithvideoplatformssuchasYoukuTudou,socialandcommunicationappssuchasWeibo,MomoandDingTalk,Internet-basedservicessuchasUCWebandAutoNavi,andsearchengines.
PeersBaiduPromoteisapay-for-performanceonlinemarketingserviceintroducedbyBaidu.ThemarketingservicehasgainedinpopularityfromthehugetrafficofBaidu,China’sNo.1searchengine.
TencentSocialAdsisTencent’sadvertisingbusinesswhichemploysitsvarioussocialnetworksasmarketingchannels.
JDJZTisJD.com’sdigitalmarketingplatformthatwaslaunchedin2014.Thecompanyalsofeaturesmarketingsolutionsbasedonbigdata.JZTiscollaboratingwithTencenttolaunchaprogramtoprovideanintegratede-commerceandsocialnetworkplatform.
Source:jzt.jd.com
KeymetricsThetotalnumberofAlimamausershasreached600million,asof2016,accordingtoCaixin.
OutlookHigherchannelintegration:Alimama’sfuturestrategywillbepremisedonhelpingbrandswithdigitaladvertisingacrosschannels.UniMarketingwillplayanimportantroleunderNewRetailindeliveringconsumer-centric,data-drivenadvertisingforonlineandofflinemerchants.
Expandthroughpartnerships:Weexpectretailers’demandfordata-drivenadvertisingtoincreaseandthatAlimamawillfurtherexpandthroughpartnerships.
AdvancementofAlimama’sdigitaladvertisingtechnology:Alimamacanoptimizepricingthroughmachinelearningandoptimallymatchsupplyanddemand.
Alimamafuturestrategywillbetohelpbrandswithdigitaladvertisingacrosschannels.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Appendix
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Alibaba’s25OperationUnits1. NetworkDivision
2. ClientServicesDivision
3. AlimamaAdvertisingDivision
4. ShoppingSearcheTaoDivision
5. TmallDivision
6. LogisticsDivision
7. Liangwuxian(oo.tmall.com)Division
8. OnlineTravelDivision
9. CategoryOperationsDivisions
10. DigitalContentDivision
11. GeneralAdministrativeDivision
12. ConsumerServiceDivision
13. InteractiveDivision
14. MobileStrategyDivision
15. AlibabaInventoryManagement(AliWangwang)andAppsDivision
16. MusicDivision
17. GroupBuying(Juhuasuan.com)Division
18. LocalDealsDivision
19. DigitalPlatformsDivision
20. InformationPlatformDivision
21. AlibabaMobileOS(yunos.com)Division
22. AlibabaCloudComputingDivision
23. B2BChinaDivision
24. B2BInternationalDivision
25. B2CInternationalDivision
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comEsmePauAnalystZaneYangResearchAssistantMatthewLeeResearchAssistant
HongKong:2ndFloor,HongKongSpinnersIndustrialBuildingphase1&2800CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com