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The Alibaba Group's revenue for the entire 2017 was ~$23B (see https://finance.yahoo.com/quote/BABA/financials?p=BABA https://finance.yahoo.com/quote/BABA/finan

The Alibaba Group's revenue for the entire 2017 was ~$23B (see https://finance.yahoo.com/quote/BABA/financials?p=BABA https://finance.yahoo.com/quote/BABA/financials?p=BABA), so making $18B in a single day sounds unbelievable. Is one of these numbers incorrect?

adventured 9y ago
They're both correct. Alibaba makes almost all of its money from advertising. They're frequently incorrectly portrayed as a traditional retailer, akin to Amazon (which itself is increasingly not a retailer). They're a retailer in the sense that eBay is. They own no merchandise, they sell no merchandise. They're a platform that other people sell on/through. They don't primarily make money from listing fees though (as eBay does), in their case it's from ads and equivalent. Alibaba has a lot more in common with Google than Walmart (which is also why their profit margins are so high, versus eg JD.com). Incredibly, when Alibaba was founded, China's GDP was ~1/11th what it is today. Which is another way of saying, they were dramatically poorer just 18 years ago. That factor combined with non-existent online micro charging capabilities circa 1999, no smartphones, etc. meant that Jack Ma couldn't easily charge traditional listing/selling fees to be on their platform. So they went with a mostly free platform that made money via ads. That is also a big reason eBay failed in China despite being there semi-early: (story from 2010 about what happened to eBay in China) https://www.forbes.com/sites/china/2010/09/12/how-ebay-failed-in-china/ https://www.forbes.com/sites/china/2010/09/12/how-ebay-faile...
- quicklime 9y ago
  I see, so it looks like what's being measured here is "gross merchandise volume", which is the total value of orders placed on their platform. Whereas the revenue in their financial statements is the money they make from advertising and their other businesses.
  - adventured 9y ago
    That's right. eBay's gross merchandise volume for example was $84 billion in fiscal 2016 (their revenue take was $9 billion). Every year the media makes a big deal about Alibaba's merchandise volume. It's a cute soundbite, and it's certainly a large number, but it's not how they make money at all. Their own revenue can technically grow far faster or slower than the merchandise volume (I would expect them to outperform their merchandise volume growth rate in the coming years, as they increase ad rates as China's economy scales the value ladder & GDP per capita keeps climbing, while their manufacturing and exports grow very modestly if at all).
noselasd 9y ago
the alibaba site is a marketplace, the $18B are made by all the merchants, not soly by the alibaba group

adventured 9y ago

They're both correct. Alibaba makes almost all of its money from advertising. They're frequently incorrectly portrayed as a traditional retailer, akin to Amazon (which itself is increasingly not a retailer). They're a retailer in the sense that eBay is. They own no merchandise, they sell no merchandise. They're a platform that other people sell on/through. They don't primarily make money from listing fees though (as eBay does), in their case it's from ads and equivalent. Alibaba has a lot more in common with Google than Walmart (which is also why their profit margins are so high, versus eg JD.com). Incredibly, when Alibaba was founded, China's GDP was ~1/11th what it is today. Which is another way of saying, they were dramatically poorer just 18 years ago. That factor combined with non-existent online micro charging capabilities circa 1999, no smartphones, etc. meant that Jack Ma couldn't easily charge traditional listing/selling fees to be on their platform. So they went with a mostly free platform that made money via ads. That is also a big reason eBay failed in China despite being there semi-early: (story from 2010 about what happened to eBay in China) https://www.forbes.com/sites/china/2010/09/12/how-ebay-failed-in-china/ https://www.forbes.com/sites/china/2010/09/12/how-ebay-faile...

quicklime 9y ago
I see, so it looks like what's being measured here is "gross merchandise volume", which is the total value of orders placed on their platform. Whereas the revenue in their financial statements is the money they make from advertising and their other businesses.
- adventured 9y ago
  That's right. eBay's gross merchandise volume for example was $84 billion in fiscal 2016 (their revenue take was $9 billion). Every year the media makes a big deal about Alibaba's merchandise volume. It's a cute soundbite, and it's certainly a large number, but it's not how they make money at all. Their own revenue can technically grow far faster or slower than the merchandise volume (I would expect them to outperform their merchandise volume growth rate in the coming years, as they increase ad rates as China's economy scales the value ladder & GDP per capita keeps climbing, while their manufacturing and exports grow very modestly if at all).

noselasd 9y ago

the alibaba site is a marketplace, the $18B are made by all the merchants, not soly by the alibaba group