Alibaba: Company Description

Alibaba, through its subsidiaries, provides e-commerce and digital solutions to businesses in China and internationally. It operates in four segments: Core Commerce; Cloud Computing; Digital Media and Entertainment; and Innovation Initiatives and Others. [caption id="attachment_99779" align="aligncenter" width="700"] Source: Company reports[/caption]  

Key Events Overview: 2017-2019

Since 2017, Alibaba has been expanding its cloud business into territories outside China. It has opened new data centers across the world, particularly in Asia and Europe. In October 2018, the company opened a new data center in the UK, a country where rival Amazon already has a strong presence. E-commerce is still a key part of Alibaba’s business, as reflected in its recent acquisition of cross-border e-commerce platform Kaola for about $2 billion. This deal will help Alibaba to capture a higher share of China’s cross-border e-commerce market, which is projected to reach ¥12 trillion ($1.7 trillion) by 2020, according to the company’s research arm Ali Institute. Alibaba’s cross-border e-commerce platform Tmall Global held a 25.1% share of the market in the first half of 2019, whereas Kaola held 27.7%, according to research company iiMedia Research Group. Alibaba has stepped up its push into the local-services market. In October 2018, the company merged its food-delivery platform Ele.me and local-services site Koubei into one offering, to service China’s local-services market (e.g., grocery deliveries, takeaway deliveries and local services, such as movie ticket booking). This market was worth ¥1.562 trillion (around $236 billion) in 2018, with 56.3% year-over-year growth, according to market research firm Analysys. Alibaba said at its investor day in September 2019 that the merged entity has performed well; it now operates in over 100 cities—of which more than 70 are in less-developed areas—and saw sales grow by 40% year over year in the June quarter. Brick-and-mortar retail is another area of investment for Alibaba. In May 2019, the company invested $633 million in one of China’s largest home-furnishings and -improvement retailers, Red Star Macalline, which operates more than 300 home-furnishings shopping malls across China, as of December 2018. Alibaba has been investing more in new media companies to enhance the digital marketing function for its e-commerce businesses. In May 2019, it invested $100 million in Vmate, a three-year-old video-streaming and short-video-sharing app owned by subsidiary UC Web. In March 2019, Alibaba also injected $171 million via a convertible loan to news and video aggregation startup Qutoutiao. Figure 2. Alibaba: Events Timeline, 1999–2019 [wpdatatable id=38]

Source: Company reports/S&P Capital IQ/Coresight Research