BABA - Alibaba

[adhital]

1 hour ago, LearningMachine said:

#3. Alibaba's share. Would it be possible to share authoritative source of your claim of Alibaba's share?  I hope you won't claim eMarketer or Alibaba data is authoritative.  Ideal source would again be someone who will be sentenced for making a false statement.  In absence of that, we could take NBS.  In absence of that, we could take a competitor that has incentive to show more accurate figures for Alibaba.  

@LearningMachine

I’m enjoying this exercise and appreciate your pushback on this

I don’t think any source would of be of any help if BABA if fabricating the number. who else would know their revenue without them reporting first, right? perhaps internal tax filings but that's too much to dig into

For now, let’s try to invert this for fun. Let’s start with retail sales figure:

USA: Total retail sales $5 trillion 

China: Total retail sales $6 trillion

I’ll use chinapower.csis.org disposable income brackets for our fun analysis.

96% of USA   consumer (317 million) falls into low to upper middle dollars-per-day bracket.

52% of China consumer (730 million) falls into low to upper middle dollars-per-day bracket.

For this invert-exercise, let’s take this % as the only retail consumers given that the disposable income is not significant for the rest of the population, specially to BABA’s ecom offering.

USA: retail sales $5 trillion. Or, $16,000/year/consumer.

China: retail sales $6 trillion Or, $8,000/year/consumer.  

Is this a reasonable number? Chinese consumer spending avg $8,000 /year on retail goods and services compared to $16,000 US consumers? I think  this is reasonable (based on the income)

Now, lets use on JD’s data, 25% of this is e-com spend =  $2000/year.  For BABA to claim average $1400/yr  equals 70% of $2000/yr retail spend.  Remaining 30% e-com GMV (~$450Billion) is now to be shared by JD, PDD and others.

2020 GMV numbers  from JD, PDD and others tells me that BABA’s figure is reasonable.  

JD rev = $114B  

PDD rev = $214B

Suning.com rev = $50B

VIP.com = $25B

(All other small players) = ~$50B

 

https://teleport.org/cities/beijing/salaries/

[LearningMachine]

11 hours ago, LearningMachine said:

@adhital, I'll take numbers provided by someone who will be sentenced for providing false numbers.  Because we don't have that available for China, for this discussion's sake, I'll take numbers provided by National Bureau of Statistics of China (NBS) even though I don't fully trust NBS's numbers. 

#1. Total Retail Sales of Consumer Goods: NBS claims RMB 39.1981 Trillion for 2020 at https://data.stats.gov.cn/english/easyquery.htm?cn=C01. This is close to your number.

#2. Ecommerce share: NBS claims Online Retail Sales in Goods of RMB 7.01982 Trillion at http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm.  2019 is the latest annual report provided by NBS that I could find, and it has data from 2018. JD apparently has access to 2020 data from NBS and provides on slide 2 that Online Retail Penetration in 2020 is 24.9%.  So much for eMarketer's claims of 52.1% based on Alibaba's data .  JD defines in footnotes that source is NBS and that the percentage is "calculated as online physical goods consumption divided by total retail consumption."  Please see https://ir.jd.com/system/files-encrypted/nasdaq_kms/assets/2021/03/11/5-38-59/JD.com Inc 4Q2020 Financial and Operational Highlights.pdf.  24.9% of RMB 39.1981 Trillion is RMB 9.76 Trillion.

#3. Alibaba's share. Would it be possible to share authoritative source of your claim of Alibaba's share?  I hope you won't claim eMarketer or Alibaba data is authoritative.  Ideal source would again be someone who will be sentenced for making a false statement.  In absence of that, we could take NBS.  In absence of that, we could take a competitor that has incentive to show more accurate figures for Alibaba.  

 

@adhital, completing your earlier argument first, multiplying Total Retail Sales x ECommerce Share x 50% marketshare you claim for BABA based on some reports: 

RMB 39.1981 Trillion x 24.9% x 50% = RMB 4.88 Trillion

BABA is claiming 742 million x RMB 9000 = RMB 6.678 Trillion in China

In conclusion, taking data from National Bureau of Statistics of China (NBS), BABA's GMV numbers are inaccurate even if we assume 50% market share supposedly from some reports you mentioned. I'd like that to sink in because it is important!

Edited May 11, 2021 by LearningMachine

[LearningMachine]

10 hours ago, adhital said:

@LearningMachine

I’m enjoying this exercise and appreciate your pushback on this

I don’t think any source would of be of any help if BABA if fabricating the number. who else would know their revenue without them reporting first, right? perhaps internal tax filings but that's too much to dig into

For now, let’s try to invert this for fun. Let’s start with retail sales figure:

USA: Total retail sales $5 trillion 

China: Total retail sales $6 trillion

I’ll use chinapower.csis.org disposable income brackets for our fun analysis.

96% of USA   consumer (317 million) falls into low to upper middle dollars-per-day bracket.

52% of China consumer (730 million) falls into low to upper middle dollars-per-day bracket.

For this invert-exercise, let’s take this % as the only retail consumers given that the disposable income is not significant for the rest of the population, specially to BABA’s ecom offering.

USA: retail sales $5 trillion. Or, $16,000/year/consumer.

China: retail sales $6 trillion Or, $8,000/year/consumer.  

Is this a reasonable number? Chinese consumer spending avg $8,000 /year on retail goods and services compared to $16,000 US consumers? I think  this is reasonable (based on the income)

Now, lets use on JD’s data, 25% of this is e-com spend =  $2000/year.  For BABA to claim average $1400/yr  equals 70% of $2000/yr retail spend.  Remaining 30% e-com GMV (~$450Billion) is now to be shared by JD, PDD and others.

2020 GMV numbers  from JD, PDD and others tells me that BABA’s figure is reasonable.  

JD rev = $114B  

PDD rev = $214B

Suning.com rev = $50B

VIP.com = $25B

(All other small players) = ~$50B

 

https://teleport.org/cities/beijing/salaries/

 

You asked whether your calculations are reasonable here, and the answer is no.  Retail sales number provided by National Bureau of Statistics of China is for the entire country.  You can divide by a smaller number of consumers if you have the retail sales number for those smaller number of consumers.  If you only have Retail sales for the entire country, you need divide by the # of consumers in the entire country. 

Anyway, overall, you're basically trying to change your position from BABA having 50% market-share to say that BABA now has 70% market share by introducing some red-herrings in between to try to justify BABA's numbers in light of eye-opening numbers from National Bureau of Statistics of China. 

You could get close to that 70% market share you're trying to claim directly: 

BABA is claiming 742 million x RMB 9000 = RMB 6.678 Trillion in China

According to NBS, total retail sales are RMB 39.1981 Trillion and E-Commerce share is 24.9%.   So, E-Commerce market size is RMB 39.1981 Trillion x 24.9% = RMB 9.76 Trillion

6.678/9.76 = 68.4%

Overall, you're approaching the problem to justify Alibaba's numbers. I'd suggest we approach the problem to figure out what is truth.

If you have an authoritative data source that indicates Alibaba's marketshare is close to 70%, I'd like to know, but looks like no-one does. 

Edited May 11, 2021 by LearningMachine

[concerto]

3 minutes ago, LearningMachine said:

 

You asked whether your calculations are reasonable here, and the answer is no.  Retail sales number provided by National Bureau of Statistics of China is for the entire country.  You can divide by a smaller number of consumers if you have the retail sales number for those smaller number of consumers.  If you only have Retail sales for the entire country, you need divide by the # of consumers in the entire country. 

Anyway, overall, you're basically trying to change your position from BABA having 50% market-share to say that BABA now has 70% market share by introducing some red-herrings in between to try to justify BABA's numbers in light of eye-opening numbers from National Bureau of Statistics of China. 

You could get close to that 70% market share you're trying to claim directly: 

BABA is claiming 742 million x RMB 9000 = RMB 6.678 Trillion in China

According to NBS, total retail sales are RMB 39.1981 Trillion and E-Commerce share is 24.9%.   So, E-Commerce market size is RMB 39.1981 Trillion x 24.9% = RMB 9.76 Trillion

6.678/9.76 = 68.4%

Overall, you're approaching the problem to justify Alibaba's numbers. I'd suggest we approach the problem to figure out what is truth.

If you have an authoritative data source that indicates Alibaba's marketshare is close to 70%, I'd like to know, but looks like no-one does. 

This is the most compelling argument you've made so far.

Here is a press release with some numbers. It looks like NBS says China online retail sales in 2020 amounted to 11.8 trillion yen (9.6 trillion = online sales of physical goods, so perhaps this is the more relevant metric?). Either way, these numbers really make Alibaba's 7 trillion GMV claim look questionable.

I'll dig into this more later on. But appreciate your pushback here, this issue is definitely not as straightforward as I'd originally thought.

[LearningMachine]

15 minutes ago, concerto said:

This is the most compelling argument you've made so far.

Here is a press release with some numbers. It looks like NBS says China online retail sales in 2020 amounted to 11.8 trillion yen (9.6 trillion = online sales of physical goods, so perhaps this is the more relevant metric?). Either way, these numbers really make Alibaba's 7 trillion GMV claim look questionable.

I'll dig into this more later on. But appreciate your pushback here, this issue is definitely not as straightforward as I'd originally thought.

Thanks @concerto for having an open mind here. 

We need to be extra-careful with numbers from China.  We cannot look at them from a U.S. rule-of-law lens where we have faith in SEC filings.  The reason we have this faith is we have an independent judiciary with trained triers of fact who cannot be bribed with money, or threatened/influenced with political power, and these triers of fact have already sentenced in the past those who have made false statements to investors.  China still has to go through that experience, and until then, we can't just believe numbers especially where the number providers might have other incentives, where they are more afraid of saying something wrong about CCP instead of being afraid of making a false statement to shareholders.  

Edited May 11, 2021 by LearningMachine

[adhital]

 

1 hour ago, concerto said:

Here is a press release with some numbers. It looks like NBS says China online retail sales in 2020 amounted to 11.8 trillion yen (9.6 trillion = online sales of physical goods, so perhaps this is the more relevant metric?). Either way, these numbers really make Alibaba's 7 trillion GMV claim look questionable.

Let's use NBS figure as it is. In 2020, China's online retail sales was 11,760.1 billion yuan or $1.8T

Alibaba's 60% e-com market share based this figure look questionable? why so? 

1 hour ago, LearningMachine said:

Anyway, overall, you're basically trying to change your position from BABA having 50% market-share to say that BABA now has 70% market share by introducing some red-herrings in between to try to justify BABA's numbers in light of eye-opening numbers from National Bureau of Statistics of China. 

If you notice, I've excluded 48% of entire consumer population to be conservative. PDD's GMV most likely is from that pie and the reason I got 70% share for Alibaba. Market share is not a magic number. Its the reported revenue of any particular company by total sales for that region, right? 

Regardless of however I look at this, disposable income distribution or, combining GMV figure from other ecom players - BABA GMV puts them anywhere between 60 to 70% e-com market share is china. Is this questionable? Based on what?  If the NBS reported e-com sales minus the combined GMV data form all the other e-comp player is way off from Alibaba's reported sales, then yes absolutely there is a problem with Alibaba's reported number. If not, why are you questioning this number? 

The another way to verify this: poll subset of chinese consumers what % of their overall e-com purchase comes from Alibaba's marketplace? 

"The companies holding the largest market share in the Online Shopping in China industry include Alibaba Group, JD.com, Suning.com Co., Ltd, Guangzhou VIPSHOP Information and Technology Co. Ltd. and Pinduoduo Inc."  https://www.ibisworld.com/china/market-research-reports/online-shopping-industry/ 

Edited May 11, 2021 by adhital

[concerto]

1 minute ago, adhital said:

 

Let's use NBS figure as it is. In 2020, China's online retail sales was 11,760.1 billion yuan or $1.8T

Alibaba's 60% e-com market share based this figure look questionable? why so? 

If you notice, I've excluded 48% of entire consumer population to be conservative. PDD's GMV most likely is from that pie and the reason I got 70% share for Alibaba. Market share is not a magic number. Its the reported revenue of any particular company by total sales for that region, right? 

Regardless of however I look at this, disposable income distribution or, combining GMV figure from other ecom players - BABA GMV puts them anywhere between 60 to 70% e-com market share is china. Is this questionable? Based on what?  If the combined GMV data form all the other e-comp player exceeds Alibaba's sales, then yes absolutely there is a problem with Alibaba's reported number. If not, why are you questioning this number? 

The another way to verify this: poll subset of chinese consumers what % of their overall e-com purchase comes from Alibaba's marketplace? 

"The companies holding the largest market share in the Online Shopping in China industry include Alibaba Group, JD.com, Suning.com Co., Ltd, Guangzhou VIPSHOP Information and Technology Co. Ltd. and Pinduoduo Inc."  https://www.ibisworld.com/china/market-research-reports/online-shopping-industry/ 

The 11.8 trillion RMB figure includes sales of non-physical goods. Do Tmall and Taobao sell non-physical goods? I thought Alibaba had other businesses for that kind of consumption (music, movies, games, etc.). If not, the more relevant stat would be the 9.6 trillion RMB figure, which would imply nearly 70% market share. Not impossible, but higher than what I would've expected.

[adhital]

2 minutes ago, concerto said:

The 11.8 trillion RMB figure includes sales of non-physical goods. Do Tmall and Taobao sell non-physical goods? I thought Alibaba had other businesses for that kind of consumption (music, movies, games, etc.). If not, the more relevant stat would be the 9.6 trillion RMB figure, which would imply nearly 70% market share. Not impossible, but higher than what I would've expected.

Ok, let's use 9.6 trillion RMB Or, 70% share by Alibaba.

JD.com, Suning.com Co., Ltd, Guangzhou VIP.com, Pinduoduo Inc & Others = ~30% = 2.88 Trillion RMB = $458B

Public reported 2020 GMV numbers :

JD rev = $114B  

PDD rev = $214B

Suning.com rev = $50B

VIP.com = $25B

(remaining for all other e-com) = ~$55B

Overall, Alibaba's GMV looks reasonable. Is it not? Unless there are other e-com GMV's that we're not accounting for  then yes, I agree, LM did uncovered something everyone overlooked. 

[LearningMachine]

7 hours ago, adhital said:

Overall, Alibaba's GMV looks reasonable. Is it not? Unless there are other e-com GMV's that we're not accounting for  then yes, I agree, LM did uncovered something everyone overlooked. 

You asked if Alibaba's GMV still looks reasonable by trying to justify that Alibaba has 70% marketshare.  The answer is still no. 

Imagine you had to figure out Amazon's GMV, and you figured out top competitors Walmart and eBay have 5.3% and 4.7% share.  Then, you said 100-5.3%-4.7% = 90% marketshare for Amazon looks reasonable, right? 

Imagine then you said that you're going to go do full due-diligence, and look at the market share of Apple, Home Depot, Way Fair, Best Buy, Target, Costco and Macy's, and subtract that too. 

 

Imagine, then you said 100-5.3-4.7-3.7-1.7-1.5-1.3-1.2-1.1 = 78.3% looks reasonable, right?

You would still be wrong by a HUGE amount because Amazon's marketshare is only 38.7%. See https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/

 

JD claims China's retailers are even more fragmented than the U.S.  So, you may not have even heard of them.  But, it doesn't mean none of them have their own website presence, even if they are present on Alibaba (JD excludes Alibaba in this). 

Source:https://ir.jd.com/system/files-encrypted/nasdaq_kms/assets/2021/03/11/5-38-59/JD.com Inc 4Q2020 Financial and Operational Highlights.pdf

 

 

Edited May 12, 2021 by LearningMachine

[adhital]

20 hours ago, LearningMachine said:

You asked if Alibaba's GMV still looks reasonable by trying to justify that Alibaba has 70% marketshare.  The answer is still no. 

well.. atleast BABA is holding up ok today compared to the other growth stories! 

Lets forget about market share and so forth. Neither I’ve have tools nor  deep insights to be sure on any of these numbers. It’s just a hypothetical analysis to come to my own conclusion.

However, it’s my belief that Alibaba’s Tmall is THE  de facto standard B2C e-com platfrom provider for thousands of local and global merchants. It’s a virtual mall, unlike Amazon’s capital intensive fulfillment model. Even Amazon closed down its amazon China marketplace but has maintained its presence in Tmall. There should be a good reason why big brands like a L’Oréal, Adidas, Proctor & Gamble, Unilever, Gap, Ray-Ban, Levi Jeans and many others has their storefront on Tmall.  Allibaba’s Taobao is THE largest C2C platform which hosts over a hundreds of million of  products by small businesses and individual consumers. Taobao doesn't charge transaction fees and is free to join for small retailors, which helped it to grow its enormous user base. And on top, their e-com platfrom provides payment processing, analytics tools and AI data insights to retailers.  If what I’ve said so far is all true, is it reasonable to think that ~17% Chinese entire Retail GMV flows through Alibaba’s B2B, B2C and C2C e-platforms? Personally, yes I think so. Can the entire $6T retail number itself is fake? Perhaps, who knows? But I view Alibaba’s GMV risk as low prob event to my thesis. For now, we just need to agree to disagree on this topic  but I appreciate all your arguments

A good blog to read https://www.alibabacloud.com/blog/the-big-decisions-and-technology-behind-tmalls-200000-smart-stores_595698

Edited May 12, 2021 by adhital

[cubsfan]

^ Yup, these sellers depend on BABA. If your transaction costs are close to zero and the pool of buyers is enormous - how can that be anything but invaluable for the users?

[wabuffo]

DJCO 10-Q is out.   As expected, Munger sold ~$20m of BYD (1211.HK) to fund about half of his $40m BABA purchase.

It appears that BABA ADRs were acquired at $241.92  ($39.995m/165,320 ADR shares).

wabuffo

 

[cubsfan]

^ So Munger made a bundle on BYD.  If I read correctly, his cost was $1.5M and ended with a $18.5M profit on BYD?  Charlie has not lost a thing!

[LearningMachine]

46 minutes ago, cubsfan said:

Charlie has not lost a thing!

That is not entirely true.  Munger supported Berkshire's investment in Tesco, saying in 2011:

Quote

"Tesco is God Almighty in England"

 

After Berkshire made a loss on it, Munger had to eat his words in 2014, tried blaming it on Lou Simpson and Warren .

Quote

 

"Tesco owned the world for a long time. It looked inevitable.  Berkshire bought some.  I think Lou Simpson bought it originally, and Warren bought some more. They had a formula that really worked.  Then one day it stopped working so well. Partly it was hubris. They thought they were so smart, they could do something difficult like Fresh and Easy, and some other adventures like that they found were way harder.

Then the home market got tougher, just as the Japanese had trouble when behind them rose Japan and Korea.  Tesco got in trouble when Aldi came in one side and other people came in on the other.  It got tougher.  How many big companies stay totally on top forever?  Maybe Wrigley's Gum.

Basically, the normal result is what happened to Tesco.  Listen, Aldi is a tough competitor.  Ruthlessly low cost, limited assortment, all private label.  It's terribly efficient.  You think Costco's any good for the rest of the grocery stores?  And Sam's Club?  It’s a competitive world out there.  Somebody is always starting something.  Even for the branded goods makers, who looked so invincible for forty years.  The natural course of competition is that it gets tough.  It’s the people who expect everything to just keep going wonderfully who are nuts."

 

 

Edited May 12, 2021 by LearningMachine

[LearningMachine]

Also wabuffo shared more of Munger's mistakes:

On 4/6/2021 at 9:34 AM, wabuffo said:

Keep in mind FWIW that Munger's foreign investments haven't done as well as his WFC, BAC, USB US bank investments (or that 10% corporate bond that he bought and sold).

- Posco (PKX) - sold most of it at break-even to a loss.  Did a writedown during his ownership for acctg purposes.

- 005389.KS (Hyundai Pfd 3) - sold all of it at a loss.  Did a writedown during his ownership for acctg purposes.

- 1211.HK - his initial purchases back in 2011 didn't do great and he wrote down most of it to FMV.  Its performance has largely been due to its big pop in 2020 - otherwise its been "meh" for most of his holding period.  He sold probably 15% of it last year IIRC (too early - before the pop).  Probably sold another 25% this Q to fund the BABA purchase.

Not saying it won't work out.  Just pointing out the mixed-track record of buying/selling Asian stocks.

wabuffo

[cubsfan]

^ Dude - you are a real nit-picker, I got to hand you that!

Like in order to be a great investor - EVERY investment needs to make money - yeah sure!   Now that is realistic.

Edited May 13, 2021 by cubsfan

[Longtermlens]

Looks like Thomas Russo took a decent sized position in BABA per 13F. 

 

https://www.dataroma.com/m/holdings.php?m=GR

Edited May 13, 2021 by Longtermlens

[MattR]

On 5/12/2021 at 2:00 AM, LearningMachine said:

You asked if Alibaba's GMV still looks reasonable by trying to justify that Alibaba has 70% marketshare.  The answer is still no. 

Imagine you had to figure out Amazon's GMV, and you figured out top competitors Walmart and eBay have 5.3% and 4.7% share.  Then, you said 100-5.3%-4.7% = 90% marketshare for Amazon looks reasonable, right? 

Imagine then you said that you're going to go do full due-diligence, and look at the market share of Apple, Home Depot, Way Fair, Best Buy, Target, Costco and Macy's, and subtract that too. 

 

Imagine, then you said 100-5.3-4.7-3.7-1.7-1.5-1.3-1.2-1.1 = 78.3% looks reasonable, right?

You would still be wrong by a HUGE amount because Amazon's marketshare is only 38.7%. See https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/

 

JD claims China's retailers are even more fragmented than the U.S.  So, you may not have even heard of them.  But, it doesn't mean none of them have their own website presence, even if they are present on Alibaba (JD excludes Alibaba in this). 

Source:https://ir.jd.com/system/files-encrypted/nasdaq_kms/assets/2021/03/11/5-38-59/JD.com Inc 4Q2020 Financial and Operational Highlights.pdf

 

 

I have a friend who still partly lives in China (not since the Corona pandemic). Taobao is so dominant, it is nothing compared to anything here. Literally everything they order from there. Even accessoires, clothes, electronics. All the splintermarkets that some speciality online shop captures instead of Amazon here is on Taobao on Alibaba.

Retail might be more splintered than in the US, and I don't doubt is -  as large as it is and as many upcoming are trying. But he said that for online shopping Alibaba  and Taobao it is not even close.

Edited May 13, 2021 by MattR

[Lakesider]

So results are out, trading at just over 22P/E, If we add back the fine to GAAP income, profits grew 15% Yoy. Revenues up 40% yoy. 

 

[LearningMachine]

46 minutes ago, MattR said:

I have a friend who still partly lives in China (not since the Corona pandemic). Taobao is so dominant, it is nothing compared to anything here. Literally everything they order from there. Even accessoires, clothes, electronics. All the splintermarkets that some speciality online shop captures instead of Amazon here is on Taobao on Alibaba.

Retail might be more splintered than in the US, and I don't doubt is -  as large as it is and as many upcoming are trying. But he said that for online shopping Alibaba  and Taobao it is not even close.

Thanks @MattR for sharing first-hand data.  If your friend could go back and look at his account to see how much he actually spent on Taobao, how much was it per week or month?  Is he one of those super-spenders who spent over 100,000 RMB annualized per year to make up for folks spending less than 2000 RMB per year?  Does he know how much his relatives actually spend per year on Taobao?  I'm assuming they're in one of the rich urban areas? 

If someone asked me anecdotally about Amazon in the U.S., I'd tell them it is very dominant and nothing else is even close because that's the first place where I go to get something, and I wouldn't even be able to rattle off any online retailers beyond Amazon, eBay, Walmart and Costco. However, when I go back and look at how much I actually spent per year on Amazon, it is peanuts. 

Edited May 13, 2021 by LearningMachine

[LearningMachine]

In the latest Quarterly earnings deck at https://www.alibabagroup.com/en/ir/presentations/pre210513.pdf, Alibaba is now claiming RMB 7.5 Trillion from China Retail Marketplaces (Taobao and TMall) across 811 Million annual active consumers for an average of RMB 9,247.

In context of RMB 9.6 Trillion reported by National Bureau of Statistics, Alibaba is now claiming 78.125% market share in ecommerce in China.

This leaves 9.6-7.5 = RMB 2.1 Trillion = $325 Billion USD for any other e-commerce retailers.

$325 Billion USD is less than publicly reported numbers that adhital shared above from JD, PDD, Suning and VIP, which add up to $403 Billion USD. 

So, someone (either BABA and/or other retailers) is making false statements, and in the process, also denying the existence of any other e-commerce retailer selling directly to consumers in China!

 

Edited May 13, 2021 by LearningMachine

[MattR]

1 hour ago, LearningMachine said:

Thanks @MattR for sharing first-hand data.  If your friend could go back and look at his account to see how much he actually spent on Taobao, how much was it per week or month?  Is he one of those super-spenders who spent over 100,000 RMB annualized per year to make up for folks spending less than 2000 RMB per year?  Does he know how much his relatives actually spend per year on Taobao?  I'm assuming they're in one of the rich urban areas? 

If someone asked me anecdotally about Amazon in the U.S., I'd tell them it is very dominant and nothing else is even close because that's the first place where I go to get something, and I wouldn't even be able to rattle off any online retailers beyond Amazon, eBay, Walmart and Costco. However, when I go back and look at how much I actually spent per year on Amazon, it is peanuts. 

He just wrote back. He describes himself as upper middle class in Shanghai and spend 62158.26 yuan  so 9627.69$ last year. He said quite a lot was for a new laptop, but that others order more often than he does and that the general spending level in cities is very similar. While he doesnt't many also order toiletries and canned food from Taobao.

He also said: Don't trust all the numbers, as he thinks they are double counted for tmall and taobao

Edited May 13, 2021 by MattR

[Fitz]

LM - It's a valid point, the share seems insanely high in relation to its competition in China. You should send this info over to some of a analysts on the last call, would be really awesome if Alibaba clarified this.

 

CFO indicated the take rate is "Currently, our take is somewhere around 4%" seems to be what everyone was guessing in here.

 

One of the QA answers was nice to here; "So as we stated in our earnings guidance, we plan to invest all incremental profit in the coming year into growing our business further and investing for the future." Looks like they will be investing a lot more money, to make customers lives easier and better and also to lower costs and take share. 70% of there additional AAC users came from rural areas. 

GMV up 20% rom 1t to 1.2t

AAC up 11% from 725m to 811

Adv spend up: 1.7% from 1400 to $1425

Cloud up 50% and profitable last 2 quarters.

Some really great progress for a company trading at 20x ttm earnings and growing eps nearly 30% over last 5 years. 

 

 

 

[Fitz]

LM - It's a valid point, the share seems insanely high in relation to its competition in China. You should send this info over to some of a analysts on the last call, would be really awesome if Alibaba clarified this.

 

CFO indicated the take rate is "Currently, our take is somewhere around 4%" seems to be what everyone was guessing in here.

 

One of the QA answers was nice to here; "So as we stated in our earnings guidance, we plan to invest all incremental profit in the coming year into growing our business further and investing for the future." Looks like they will be investing a lot more money, to make customers lives easier and better and also to lower costs and take share. 70% of there additional AAC users came from rural areas. 

GMV up 20% rom 1t to 1.2t

AAC up 11% from 725m to 811

Adv spend up: 1.7% from 1400 to $1425

Cloud up 50% and profitable last 2 quarters.

Some really great progress for a company trading at 20x ttm earnings and growing eps nearly 30% over last 5 years. 

 

 

 

[LearningMachine]

38 minutes ago, MattR said:

He just wrote back. He describes himself as upper middle class in Shanghai and spend 62158.26 yuan  so 9627.69$ last year. He said quite a lot was for a new laptop, but that others order more often than he does and that the general spending level in cities is very similar. While he doesnt't many also order toiletries and canned food from Taobao.

He also said: Don't trust all the numbers, as he thinks they are double counted for tmall and taobao

Thanks @MattR, really appreciate your data from the ground!

Does he or anyone he knows ever order from anyone other than TaoBao, Tmall, JD, Suning, Guangzhou, VIP, or PDD? For example, does anyone he know ever buy directly from any brand's website, e.g. https://www.apple.com.cn/, https://www.huawei.com/cn/, https://www.vmall.com/, https://www.lenovo.com.cn/, https://www.hpstore.cn/, https://www.dell.com/zh-cn/shop, https://www.microsoft.com/zh-cn or https://www.samsung.com/cn/, for example to avoid risk of getting counterfeits?

When he says to not trust all the numbers, does he mean only number of annual active consumers are double-counted, or does he mean GMV and average spend per customer are also double-counted?

Edited May 13, 2021 by LearningMachine