Alibaba: Prioritizes improving user purchasing experience and will fully refund annual service fees to some small and medium-sized merchants

Alibaba today released its financial report for the first fiscal quarter of fiscal year 2025 as of June 30: revenue was 243.236 billion yuan, a year-on-year increase of 4%. Net profit was 24.022 billion yuan, a year-on-year decrease of 27%; not according to U.S. GAAP, net profit was 40.691 billion yuan, a year-on-year decrease of 9% (Note: Alibaba’s fiscal year is not synchronized with the natural year, starting from April 1 of each year. Begins and ends on March 31 of the following year).
After the financial report was released, Alibaba Group Chairman Tsai Chongxin, CEO Wu Yongming, CFO Xu Hong, and Alibaba International Digital Commerce Group (AIDC) Co-Chairman and CEO Jiang Fan attended the subsequent conference call to interpret the financial report and Answered analyst questions.
The following is the main content of the analyst Q&A session of this conference call: Goldman Sachs analyst Ronald Keung: My question is about the take rate. I see the company achieving high single-digit GMV (gross merchandise volume) growth this quarter, but only 1% CMR (customer management revenue) growth. From a numerical perspective alone, the gap between the two data this quarter is getting wider and wider. But management just mentioned that the gap between GMV and CMR will gradually narrow in the future. My question is, if GMV and CMR will gradually synchronize in the future, what will their respective change curves be? What specific steps will management take? What changes will be brought about by future software launches and upgrades? In the next few quarters, how will the launch of new products translate into the respective monetization rates of Taobao and Tmall?
Wu Yongming: In my opinion, for Taobao and Tmall businesses, the company’s current priority is to improve users’ purchasing experience, thereby driving users’ purchase frequency and GMV growth. We see that as the initial market share stabilizes, starting from this quarter, the progress of some of our projects that were originally aimed at improving monetization and commercialization measures will begin to accelerate.
There are several main factors in this. The first factor is that we have brought high user flow and user repurchase in many new product forms, such as live streaming, "tens of billions of subsidies" and other new product forms that we have invested heavily in this year, but these The realization of new products and merchants and the commercialization of products will take a certain amount of time to promote, and this is also a process that we will gradually promote later.
The second factor is that, in other words, another important change is that our advertising product "full site promotion" has gradually begun to accelerate. If "whole-site promotion" wants to run well, everyone must understand that it is not just a simple product, it requires the cooperation of three aspects: that is to say, we need to compare on the traffic channels of all Taobao terminals and all traffic user terminals Effective docking and access; in addition, especially on the advertiser side, we need to have sufficient industry coverage; finally, products that support "full site promotion" need to have a sufficient number of advertisements, and about 6 more Advertising algorithm optimization and user data optimization for more than months.
So, we believe that after the product "site-wide promotion" is launched in April, we will see some obvious effects and progress within 6 to 12 months after its launch. However, we predict that if the three measures I mentioned just now are to be perfectly combined to form a system, it may take 12 months after the product is launched, at which time these three aspects will form a more perfectly coordinated system.
There is another change, which is the change in technical service fees. Our CFO Xu Hong will introduce it to you later.
Xu Hong: Let me quickly share with you the changes in technical service fees.
You may have seen before that we plan to start collecting technical service fees from merchants on Taobao and Xianyu in September, which is about "Qianliu" (six thousandths, 0.6%) as a basic software service fee. This part of the collection is levied based on the merchant's "confirmed receipt GMV" (confirmed receipt GMV). The specific charging ratio will be implemented after comprehensive consideration of industry practices and feedback from merchants. It is currently expected to be in September.
At the same time, we will also fully consider the situation of small and medium-sized businesses. Therefore, for small and medium-sized merchants whose annual GMV is less than a certain amount, we will fully refund their annual service fees, or provide a certain amount to help them expand their customer base on the Taobao platform and increase their GMV. We expect the collection of service fees to gradually start contributing to revenue in the remaining quarters of this fiscal year, that is, the seven months after September.

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