Fiscal Year Annual Report 2024 Alibaba Group Holding Limited NYSE: BABA HKEX: 9988 (HKD Counter) 89988 (RMB Counter)
2 Our Mission 3 Our Vision 5 Our Values 6 Key Events in Fiscal Year 2024 8 Letter from our Chairman and our CEO 12 Business Overview 80 Management Discussion and Analysis 132 Directors, Senior Management and Employees Contents 153 Major Shareholders and Related Party Transactions 169 Other Information to Shareholders 183 Exemptions and Waivers 185 Risk Factors 250 Definitions 256 Financial Statements 344 Further Information
Accelerating our core businesses’ growth Maintaining leadership in fundamental technologies and innovation, including AI
Our Mission Our founders started our company to champion small businesses, in the belief that the Internet would level the playing field by enabling small enterprises to leverage innovation and technology to grow and compete more effectively in domestic and global economies. We believe that concentrating on customer needs and solving their problems — whether those customers are consumers, merchants or enterprises — ultimately will lead to the best outcome for our business. In the digital era, we are staying true to our mission by helping our customers and business partners harness the power of digital technology. We have developed a large ecosystem powered by technology infrastructure that enables participants to create and share value on our platforms. Our decisions are guided by how they serve our mission over the long term, not by the pursuit of short-term gains. To make it easy to do business anywhere 2 Alibaba Group Holding Limited
Years We do not pursue size or power; we aspire to be a good company that will last for 102 years. For a company that was founded in 1999, lasting for 102 years means we will have spanned three centuries, an achievement that few companies can claim. Our culture, business models and systems are built to last, so that we can achieve sustainability in the long run. We aim to build the future infrastructure of commerce. We envision that our customers will meet, work and live at Alibaba, and that we will be a good company that lasts for 102 years. Our Vision 3 Fiscal Year 2024 Annual Report
We empower our customers with the fundamental infrastructure for commerce and new technology, so that they can build businesses and create value that can be shared among our ecosystem participants. We strive to expand our products and services to become central to the everyday lives of our customers. Alibaba @ LIVE Alibaba @ WORK We enable commercial and social interactions among hundreds of millions of users, between consumers and merchants, and among businesses every day. Alibaba @ MEET 4 Alibaba Group Holding Limited
Customers first, employees second, shareholders third This reflects our choice of what’s important, in order of priority. Only by creating sustained customer value can employees grow and shareholders achieve long-term benefit. Trust makes everything simple Trust is both the most precious and fragile thing in the world. The story of Alibaba is a story of building and cherishing trust. Complexity begets complexity, and simplicity breeds simplicity. Aliren (阿里人) are straightforward – what you see is what you get. With trust, there is no second-guessing or suspicion, and the result is simplicity and efficiency. Change is the only constant Whether you change or not, the world is changing, our customers are changing and the competitive landscape is changing. We must face change with respect and humility. Otherwise, we will fail to see it, fail to respect it, fail to understand it and fail to catch up with it. Whether you change yourself or create change, both are the best kinds of change. Embracing change is the most unique part of our DNA. Today’s best performance is tomorrow’s baseline In Alibaba’s most challenging times, this spirit has helped us overcome difficulties and survive. In bad times, we know how to motivate ourselves; in good times, we dare to set “dream targets” (stretch goals). Face the future, or we regress. We must shoot for the moon, challenge ourselves, motivate ourselves and exceed ourselves. Live seriously, work happily Work is now, life is forever. What you do in your job is up to you, but you have responsibility to the ones who love you. Enjoy work as you enjoy life; treat life seriously as you do work. If you live with purpose, you will find reward. You make Alibaba different and make your loved ones proud. Everyone has their own view of work and life; we respect each person’s choice. Whether you live by this value depends on how you live your life. If not now, when? If not me, who? This was a tagline in Alibaba’s first job advertisement and became our first proverb. It is not a question, but a call of duty. This proverb symbolizes the sense of ownership that each Aliren must possess. Our Values Our values are fundamental to the way we operate and how we recruit, evaluate and compensate our people. Customers First, Employees Second, Shareholders Third Trust Makes Everything Simple If Not Now, When? If Not Me, Who? Today’s Best Performance Is Tomorrow’s Baseline Live Seriously, Work Happily Change Is The Only Constant 5 Fiscal Year 2024 Annual Report
June Alibaba Cloud’s AI-driven sustainability solution, Energy Expert, was leveraged at the first Olympic Esports Week to measure and analyze carbon emissions generated by the construction of the event’s temporary stadium and to provide data-driven insights on materials and equipment used. April Alibaba Cloud unveiled its proprietary AI large language model (LLM), Qwen (also known as Tongyi Qianwen), which has been increasingly integrated into various business applications across the Alibaba ecosystem. Later in the year, Alibaba Cloud released Qwen 2.0, along with multiple brand new industryspecific verticallytrained LLMs. May Taobao celebrated its 20th anniversary by hosting the Taobao Maker Festival across ten cities popular with tourists in China with free public admission. Alibaba Group board of directors introduced a new Capital Management Committee to enhance shareholder value through a comprehensive plan. The board of directors also established a Compliance and Risk Committee to oversee Alibaba Group’s overall regulatory compliance and risks in key areas other than financial reporting. 2023 2024 February Alibaba Group upsized its share buyback program by US$25 billion as part of its ongoing enhancement of shareholder returns. Note: (1) Gartner®, “Market Share: Services, Worldwide, 2023”, Neha Sethi et al., 12 April 2024, Sorted by Infrastructure-as-a-Service (IaaS), Vendor Revenue Basis) (Asia Pacific refers to Mature Asia/Pacific, China (Region), Emerging Asia/Pacific and Japan (Region), and market share refers to that of Infrastructure-as-a-Service (IaaS). 6 Alibaba Group Holding Limited Key Events in Fiscal Year 2024
September Alibaba Group completed the leadership transition of its Chairman and Chief Executive Officer. The company laid out “user-first” and “AI-driven” as its two main strategic focuses, reshaping its business priorities. The Hangzhou 19th Asian Games were held from September 23 to October 8, 2023. As the official partner of the Hangzhou Asian Games, Alibaba Group worked to digitalize the Games by migrating the Games’ core systems onto the cloud and transforming it into the first ever “Asian Games on the Cloud”. December Alibaba Cloud open-sourced LLMs with parameters ranging from 0.5 billion, 1.8 billion, 4 billion, 7 billion, 14 billion, 32 billion and 72 billion, as well as multimodal LLMs with audio and visual understanding capabilities. As of March 31, 2024, Alibaba Cloud’s open-source AI model community ModelScope has become the leading destination for high-quality models and thousands of datasets, providing models and free computing power services to developers. Alibaba Group is the world’s fourth largest and Asia Pacific’s largest Infrastructure-as-a-service provider by revenue in 2023 in U.S. dollars, according to Gartner’s April 2024 report(1). November For the 2023 11.11 Global Shopping Festival, Taobao and Tmall Group recorded positive year-on-year growth in participating merchants, transacting buyers and order volume compared to the same period last year. Alibaba Group board of directors approved the company’s first annual dividend for fiscal year 2023 to enhance shareholder returns. Eddie Wu, Chief Executive Officer of Alibaba Group, unveiled a strategy for the next growth phase, highlighting the Group’s future direction, key priorities and execution path. Alibaba Group joined the World Business Council for Sustainable Development and collaborated with its members to develop a framework and methodology on Avoided Emissions. March AliExpress Choice celebrated its first anniversary. Merchants are empowered by Choice to focus on supply chain management while minimizing retail commerce operational barriers through the “Fulfilled by AliExpress” offering. 7 Fiscal Year 2024 Annual Report
Joe Tsai Chairman, Alibaba Group Eddie Wu Chief Executive Officer, Alibaba Group 8 Alibaba Group Holding Limited Letter from our Chairman and our CEO
Dear Shareholders, Our fiscal year ended March 31, 2024 was a watershed. It was a year in which Alibaba made several pivots toward strategic clarity. This clarity has helped us to define who we are, our direction, and how we will execute our strategy. We believe it is important to share the thought process we went through this past year, and what it means for Alibaba in the future. Who We Are Alibaba has two core businesses: e-commerce and cloud computing. As part of the consumer economy in China, we have developed an ecosystem of Internet platforms to tap into opportunities in local services, communications, search, and digital entertainment. In e-commerce, we run Taobao and Tmall Group (TTG), which includes platforms for the domestic China consumer and business-to-business markets, and Alibaba International Digital Commerce Group (AIDC), which includes platforms for the international consumer and business-to-business markets. Other divisions in the company provide strategic value by bringing synergies that make our e-commerce businesses more valuable. For example, the on-demand delivery business Ele.me provides the infrastructure for instant delivery of fresh and perishable items purchased from our e-commerce platforms; and our logistics subsidiary Cainiao provides the supply chain, transport, and delivery capabilities to create a great experience for the consumers shopping on the TTG and AIDC platforms. In cloud computing, we aim to be the leading public cloud infrastructure and platform technology provider in China, supplying a broad range of capabilities to our customers, including elastic computing, storage, network infrastructure, security, big data, and artificial intelligence (AI). Our Strategic Direction We have chosen two important paths for the strategic direction of our business. As leaders of the company, we must clearly articulate our direction. The first strategy is User First. Users of our various platforms come first in the way we operate our business and design products, from user interface to algorithmic matching to customer service. China has the world’s largest Internet population with 1.1 billion users, and China’s e-commerce penetration is one of the highest in the world at around 28% of total consumer retail. Today, you can find every kind of consumer product for sale online. If brands and distributors want to differentiate themselves, they will increasingly need the targeted consumer marketing services provided by Internet platforms. Our User First approach will prioritize user experience in business strategy and product design to drive retention and repeat purchases. This will provide the best value proposition to sellers of goods and services on our platforms, such as Taobao, Tmall, Xianyu, Fliggy, Ele.me, Amap, and AliExpress, because Alibaba is where they can find the most robust, well-segmented, and highest frequency user base for online consumption. The second strategic direction is our focus on AI as the single most powerful element that will change and accelerate the growth of our businesses. Over the next decade, no industry will be spared the disruption brought about by AI. Rather than protecting the old way of doing things, AI has re-ignited our start-up passion and imagination. Each of our businesses has massive numbers of use cases, all of which can use AI applications to unleash powerful value, and the 9 Fiscal Year 2024 Annual Report Letter from our Chairman and our CEO
deployment of AI will increase demand for computing and drive growth for Alibaba Cloud. AI will not be a threat but will herald in massive opportunities as the driver for breakthrough user experience and business models. If we don’t keep up with the constant and marvelous improvements that AI is showing us on a daily basis, we will be displaced. Operating Principles We follow a number of operating principles as we execute our strategy. First, we take a long-term perspective when making hard decisions. We think in 10-year cycles as the development cadence of technology businesses typically experience the phases of investment, growth, harvest, profit, and invariable decline. Our businesses are in different phases and must be managed differently. For example, AIDC is nascent and requires upfront investment; Alibaba Cloud is investing for future growth while harvesting the fruits of economies of scale; and TTG is a mature business that must innovate fast and capture the next growth cycle. Second, we apply extreme focus and intentionality in everything we do. Focus means we are not distracted by unimportant things, and in determining what is important or not, we are unemotional when facing hard choices. Intentionality means we develop sound reasons for doing what we do. For example, Alibaba Cloud’s pivot to a public cloud strategy reflects the rationale of our structural advantages in technology leadership and scale economies; at the same time, we made a hard choice to forego short-term revenue from low-margin projectbased business. Last but not least, we communicate a clear direction to our teams and seek alignment from them by setting sound incentive systems. We believe that transparency of strategic direction and demonstration of intentionality from company leaders make a more productive and happier workforce. We have developed employee incentive systems that are tied to our mid- and long-range strategic goals, so that our teams know exactly where they stand financially based on business performance. Capital Management In fiscal year 2024, Alibaba generated US$21.6 billion in free cash flow. It is the responsibility of management to determine how we deploy our cash to maximize shareholder value. We face a trade-off of returning cash to shareholders on the one hand, and re-investing the cash into existing or new businesses on the other hand. Our capital management activities in fiscal year 2024 reflected the company’s focus on our core business. We did not put money into new business lines. Instead, we declared and paid, for the first time in company history, a dividend of US$2.5 billion, and we repurchased US$12.5 billion of our own shares, which resulted in a net reduction of 5.1% in outstanding shares. In fiscal year 2024, we delivered value to shareholders by returning cash and creating earnings accretion. Letter from our Chairman and our CEO 10 Alibaba Group Holding Limited
Joe Tsai Chairman May 23, 2024 Eddie Wu Chief Executive Officer Investing for the Future Returning cash to shareholders does not mean we will stop investing. There are two areas where Alibaba will continue to invest: (1) to accelerate our core businesses’ growth, and (2) to maintain leadership in fundamental technologies and innovation, including AI. It is important for you to understand our investment in AI. The latest developments in generative AI with new iterations of large language models (LLMs) from major global technology companies are relevant to Alibaba in three ways. First, as technology pioneers, we are interested in exploring the potential of machine intelligence to achieve artificial general intelligence (AGI). Ultimately, humankind may be able to achieve AGI based on certain definitions. The current approach that pushes toward AGI is LLMs that use the transformer architecture. As LLMs get bigger and go multimodal to incorporate voice, video and image in addition to text, the level of investment that is required in infrastructure and development can only be taken on by large technology companies that generate substantial free cash flows from their core business. Alibaba has a market-leading proprietary LLM, Qwen, and we will continue to invest in LLM and other AI innovations to push the limits of machine intelligence. Second, investment in LLMs drives the growth of our cloud computing business as the training and usage of LLMs in development or inference will require computing resources. We have made open-source versions of our LLM Qwen available to the public, bringing additional demand for our proprietary model that results in computing resource needs. We also have China’s largest open-source LLM community, ModelScope, which includes thirdparty LLMs for developers who need access to our computing resources. Thus, being a leader in the development of AI brings direct positive growth to our cloud computing business. Third, Alibaba is an integral part of the consumer economy. The user experience within our multitude of consumer use cases can be transformed with AI applications, from shopping recommendations to virtual showrooms to personal assistants. We are excited by the limitless possibilities for AI to drive our User First strategy. In closing, we want to say this: Alibaba is about the future. In the past 25 years, Alibaba has grown consistently but, unfortunately, acquired “large company” characteristics. For the next ten years, we see ourselves again as a start-up defined by entrepreneurship, innovation, and our mission “to make it easy to do business anywhere.” We will apply long-term thinking when we make trade-offs today and invest for tomorrow. Letter from our Chairman and our CEO 11 Fiscal Year 2024 Annual Report
Business Overview
Company Overview To fulfill our mission “to make it easy to do business anywhere,” we enable businesses to transform the way they market, sell and operate and improve their efficiencies. We provide the technology infrastructure and marketing reach to help merchants, brands, retailers and other businesses to leverage the power of new technology to engage with their users and customers and operate in a more efficient way. We also empower enterprises with our leading cloud infrastructure and services and enhanced work collaboration capabilities to facilitate their digital transformation and to support the growth of their businesses. In fiscal year 2024, our businesses comprise Taobao and Tmall Group, Cloud Intelligence Group, Alibaba International Digital Commerce Group, Cainiao Smart Logistics Network Limited, Local Services Group, Digital Media and Entertainment Group and All Others. An ecosystem has developed around our platforms and businesses that consists of consumers, merchants, brands, retailers, third-party service providers, strategic alliance partners and other businesses. Taobao and Tmall Group China Commerce Retail We are the largest retail commerce business in the world in terms of GMV in the twelve months ended March 31, 2024, according to Analysys. Our China commerce retail businesses primarily include Taobao and Tmall, which together constitute the world’s largest digital retail business in terms of GMV for the twelve months ended March 31, 2024, according to Analysys. Our China commerce retail business derives the majority of its revenue from customer management services. We generate customer management revenue from merchants by offering an integrated package and a comprehensive solution comprising a diverse array of services to enable them to attract, engage and retain consumers, complete transactions, improve their branding and enhance operating efficiency. Customer management revenues are charged primarily on cost-per-click (CPC) basis, cost perthousand impressions (CPM) basis, time basis and cost-per-sale (CPS) basis. 14 Alibaba Group Holding Limited Business Overview
Alibaba International Digital Commerce Group Alibaba International Digital Commerce Group operates various retail and wholesale platforms to empower brands, merchants and SMEs to serve global buyers and consumers through wide product selection and differentiated customer experiences. International Commerce Retail Our International commerce retail businesses, including AliExpress, Trendyol, Lazada, Daraz and Miravia, empower brands and merchants with local market insights and critical commerce infrastructure. AliExpress, one of our international e-commerce platforms, enables global consumers to buy directly from manufacturers and distributors in China and around the world. AliExpress’ new business model, Choice, provides an enhanced experience to consumers by combining better product selection, price and quality with speed of logistics and great customer support. Trendyol, which we believe is by far the leading e-commerce platform in Türkiye in terms of both GMV and order volume in 2023, serves consumers with a broad selection of products and services through its e-commerce business as well Leveraging our product and supply chain capabilities as well as fulfillment and delivery expertise, our consumers can enjoy a broad variety of quality products and services at attractive prices with a wide selection of delivery options that satisfy their varying needs. China Commerce Wholesale 1688.com, China’s largest integrated domestic wholesale marketplace in the twelve months ended March 31, 2024 by net revenue according to Analysys, connects wholesale buyers and sellers across a wide range of categories. Cloud Intelligence Group Alibaba Group is the world’s fourth largest and Asia Pacific’s largest Infrastructure-as-a-service provider by revenue in 2023 in U.S. dollars, according to Gartner’s April 2024 report (Source: Gartner®, “Market Share: Services, Worldwide, 2023”, Neha Sethi et al., 12 April 2024, Sorted by Infrastructure-as-a-Service (IaaS), Vendor Revenue Basis) (Asia Pacific refers to Mature Asia/Pacific, China (Region), Emerging Asia/ Pacific and Japan (Region), and market share refers to that of Infrastructure-as-a-Service (IaaS)). Alibaba Group is also China’s largest provider of public cloud services by revenue in 2023, including PaaS and IaaS services, according to IDC (Source: IDC Semiannual Public Cloud Service Tracker, (2023 Q4)). Cloud Intelligence Group offers a complete suite of cloud services, including proprietary servers, computing, storage, network, security, database, big data and AI, container, machine learning, and model training and inference, serving our ecosystem and beyond. We leverage these capabilities and technologies to provide our customers across various verticals with industry-specific solutions, enabling intelligent business decisions and operations. We believe our cloud services’ added value translates into direct and tangible results, and these services have become a critical foundation for our customers, many of whom are reputable industry leaders in their respective verticals. Our proprietary large language model (LLM), Tongyi Qianwen, has been progressively integrated into various business applications across Alibaba’s ecosystem to further enhance user experience. To enable enterprise customers to reap the benefits of AI-driven innovation, Cloud Intelligence Group has started offering its clients access to Tongyi Qianwen on the cloud, enabling them to develop customized LLM for their business scenarios. We enable businesses to transform the way they market, sell and operate and improve their efficiencies. Business Overview 15 Fiscal Year 2024 Annual Report
as local consumer services for food and groceries. Consumers also enjoy the quality and convenient delivery services provided by Trendyol’s fulfillment and logistics networks. Beyond Türkiye, Trendyol has expanded to other valuable emerging markets, including the Gulf region, by leveraging its abundant product supply and fast and reliable logistics capability. Lazada, a leading e-commerce platform in Southeast Asia, serves one of the largest user bases among the global e-commerce platforms by providing consumers with access to a broad range of offerings from local SMEs, and regional and global brands. Additionally, Lazada operates one of the leading e-commerce logistics networks in Southeast Asia, which provides reliable, quality and convenient logistics services to its consumers and merchants. We also operate Daraz, a leading e-commerce platform across South Asia with key markets in Pakistan and Bangladesh. Additionally, we operate Miravia, an e-commerce platform in Spain that connects brands and content creators with consumers by providing consumers with an innovative and entertaining shopping experience. International Commerce Wholesale We operate Alibaba.com, China’s largest integrated international online wholesale marketplace in the twelve months ended March 31, 2024 by revenue, according to Analysys. During fiscal year 2024, buyers who sourced business opportunities or completed transactions on Alibaba.com were located across over 190 countries. Cainiao Smart Logistics Network Limited Our vision for our logistics services is to fulfill consumer orders within 24 hours in China and within 72 hours anywhere else in the world. To realize this vision, Cainiao has established a smart logistics network, with end-to-end logistics capabilities, on a global scale. Cainiao controls the key nodes of the logistics network to ensure service quality, efficiency and reliability, while leveraging trusted partners’ capabilities to drive scalability and capital efficiency. Globally, Cainiao offers a comprehensive suite of cross-border express delivery solutions designed to meet customers’ different needs and provides one-stop global supply chain solutions to empower brands and merchants to offer a close-to-local retail experience for consumers. In China, Cainiao offers end-to-end standardized supply chain solutions that can be applied on a massive scale across various industries, as well as certain vertical solutions to address the unique requirements of products that need special handling. Cainiao also offers a wide array of technology and other services to remove logistics hurdles and address unfulfilled customer needs. Local Services Group We leverage our proprietary mobile and online technology to enhance the efficiency, effectiveness and convenience of consumer services for both service providers and their customers in two distinct scenarios: “To-Home” and “To-Destination.” Our “To-Home” business enables consumers to order food and beverages, groceries, FMCG, flowers and pharmaceutical products anytime and anywhere through Ele.me, a leading local services and ondemand delivery platform. Our “To-Destination” businesses provide consumers with convenient access to quality services to and at their destinations primarily through Amap, a leading provider of mobile digital map, navigation and realtime traffic information in China. Amap provides users with a simple one-stop access point to services such as navigation, local services and ride-hailing. Digital Media and Entertainment Group Digital Media and Entertainment Group is an extension of our strategy to capture consumption opportunities beyond our commerce businesses. Insights we gain from our commerce businesses and our proprietary data technology enable us to deliver relevant digital Business Overview 16 Alibaba Group Holding Limited
media and entertainment content to our consumers, which drives a superior entertainment experience, increases customer loyalty and improves monetization for content providers across the ecosystem. Digital Media and Entertainment Group comprises the platforms of Youku and Alibaba Pictures, including its wholly-owned subsidiary Damai. Youku, a leading online long-form video platform in China, provides users with captivating online media and interactive experience through its high-quality content, and also promotes the transformation of the media industry by applying AI technologies. Alibaba Pictures, including its wholly-owned subsidiary Damai, provides content production, promotion and distribution, performance and event ticketing management, intellectual property-related licensing and commercial operation, cinema ticketing management and Internet data services for the entertainment industry. Through Youku and Alibaba Pictures, Digital Media and Entertainment Group extends its reach across online and offline entertainment channels, allowing users to discover and enjoy content as well as interact with each other. All Others We continue to innovate and develop new service and product offerings with the goals of meeting the evolving needs of our customers, improving efficiency in their daily lives and creating synergies among our ecosystem participants. DingTalk is our intelligent collaboration workplace and enterprise management platform that offers new ways of working, sharing and collaboration for enterprises and organizations. Quark is a leading information services platform for young users in China and provides users with a onestop platform for information search, storage and consumption. Our Ecosystem An ecosystem has developed around our platforms and businesses, consisting of consumers, merchants, brands, retailers, third-party service providers, strategic alliance partners and other businesses. At the nexus of this ecosystem are our technology platform, our marketplace rules and the role we play in connecting these participants to make it possible for them to discover, engage and transact with each other and manage their businesses anytime and anywhere. Much of our effort, time and energy is spent on initiatives that are for the greater good of the ecosystem and on balancing the interests of its participants. We feel a strong responsibility for the continued development of the ecosystem and we take ownership in this development. Accordingly, we refer to this as “our ecosystem.” Our ecosystem has strong self-reinforcing network effects benefiting its various participants, who are in turn invested in our ecosystem’s growth and success. Business Overview 17 Fiscal Year 2024 Annual Report
Taobao and Tmall Group Alibaba International Digital Commerce Group Retail Cloud Intelligence Group Retail Alibaba Ecosystem The following chart sets forth our main businesses for fiscal year 2024 by segment: 18 Alibaba Group Holding Limited Wholesale Wholesale (Xianyu)
Cainiao Smart Logistics Network Limited Digital Media and Entertainment Group Local Services Group All Others To-Home (Ele.me) 19 Fiscal Year 2024 Annual Report To-Destination (Amap)
Our Strategies In an increasingly complex world, digital adoption and transformation of our customers are accelerating across different industries. On the consumer retail side, online shopping is no longer deemed merely as a purchase behavior by the consumers but also has been adopted as a necessary sales channel by brick-and-mortar retailers. For enterprises and organizations, digital transformation is accelerating as technology changes the way people live and work. Generative AI, an innovative technology enabled by LLMs, provides innovative ways to elevate productivity to a new level, further accelerating digital transformation of enterprises and organizations. While such transformation presents tremendous opportunities, it requires us to be more focused, innovative and agile in establishing-strategic priorities and strengthening our competitive advantages. To this aim, we have proactively transformed our organization through a new organizational and governance structure to place more focus on our core business, infuse more agility into decision making process and further unlock value for our shareholders. We believe our new structure will continue to empower all of our businesses to respond quickly to industry transformation and promote innovation. With our environmental, social and governance responsibilities as the foundation of our long-term strategy, we strive to strengthen our leadership and build core capabilities in three strategic areas: consumption, cloud, and globalization. Consumption Consumption continues to present significant opportunities in China and globally. China’s digital consumption market has evolved into a market that boasts differentiated value propositions for consumers with multi-tiered spending power. While our annual active consumer base already captures the vast majority of Internet users with meaningful spending power, we believe there still remains significant growth opportunities in wallet share expansion. To capture these opportunities, we adopt a consumer-centric strategy and focus on prioritizing and enhancing shopping experience for our consumers. To improve shopping experience for our consumers, we continue to develop the Taobao app that provides our consumers with a vast range of quality products and services at attractive prices. Our commitment to building a comprehensive digital consumption platform that caters to all aspects of consumer needs is unwavering. Through the Taobao app, we will continue to execute a multi-tiered marketing strategy to acquire and retain consumers with different spending power, consumption behavior and taste. We focus on enriching an immersive and interactive consumer experience with highly engaging, consumptionrelated contents and quality services. We will continue to enhance consumer experience and enable new consumption models to better serve the evolving needs of consumers. We will also further strengthen our supply chain capabilities to improve the competitiveness of our products and enhance penetration in categories that are essential to our consumers’ daily lives. Business Overview 20 Alibaba Group Holding Limited
Across our efforts of executing a multi-tiered strategy to cater to all aspects of consumption needs, we view price competitiveness as a vital value proposition to our consumers. To make the price of our products more appealing to our consumers, we continue to leverage our position as China’s leading digital retail platform to further improve the efficiency of our service offerings and supply chain capabilities. Through Cainiao, our established hybrid delivery network, we strive to improve our consumers’ shopping experience via a more reliable and multitiered delivery experience. Going forward, we will also continue to invest in key capabilities such as AI technologies to further improve shopping experience for our consumers. We will discuss the consumption opportunity outside of China under the globalization strategy. Cloud We believe digitalization presents the biggest business opportunity of our time, and cloud computing plays a fundamental role in digital transformation across various industries. Cloud infrastructure enables traditionally unstructured, undiscovered and underutilized data to be captured, activated and harnessed as a new source of intelligence to help businesses make decisions, improve operating efficiency and grow. It also provides higher cost effectiveness and therefore is rapidly replacing traditional IT infrastructure. Enabled by generative AI, digitalization at enterprises and organizations is expected to further accelerate to fuel higher level of operating efficiency and business growth. To capture the tremendous opportunities presented by digitalization in the new era of generative AI, we have established a two-pronged strategy to improve operating efficiency and enhance our core product offerings to strengthen our market leadership as a global cloud service provider and fuel high-quality growth going forward. First, our growth strategy will be unswervingly driven by our technological capabilities in AI. We believe the cloud industry is at an inflection point to further accelerate its transition from traditional computing to accelerated computing. This transition will drive incremental business demand and opportunities for a full suite of our enterprise cloud services. Under this belief, we aim to increase investments into AI technologies and enable our cloud service offerings with AI capabilities, in the hope of better addressing the incremental business demand driven by generative AI. Meanwhile, we will stay committed to building a reliable and efficient infrastructure network to empower our customers and ecosystem partners, and support the growth of their businesses. Second, we will focus on prioritizing growth initiatives in our public cloud core business. We believe that, by scaling our public cloud business, we will not only be able to improve the quality of earnings in the short term but also reap more benefits from economy of scale in the long run. Therefore, we will continue to invest into the core products of public cloud offerings and gradually exit certain project-based businesses with suboptimal rate of return. Business Overview 21 Fiscal Year 2024 Annual Report
Globalization Despite evolving complexities in the global macro environment, we remain firmly committed to providing a multi-tiered suite of product and service offerings to our consumers worldwide, and empowering our global merchants and partners. Our core globalization strategies are supported by our robust ecosystem of consumption and technology. First, we are dedicated to building a leading digitalized global supply chain network. Leveraging our established supply network with a vast variety of product supplies and our global logistics network, we aim to integrate and upgrade the two networks into a digitalized global supply chain network anchored by key local merchandise and logistics hubs covering respective overseas markets. Second, we will continue to invest in AI and digitalized retail technologies, to facilitate operational synergies across different operating platforms and markets, and further spur innovation for consumer experience. Third, we will focus our efforts on key strategic markets such as Southeast Asia and Europe and strategically pursue growth opportunities with ideal return on investments. We believe that most of our key strategic markets’ e-commerce penetration rates still present significant headroom for growth. Basing off our established business footprints and foundations, assessments on growth potential of respective local markets and our strategic priorities, we hope to increase our investments into certain regional markets to gradually upgrade our localization capabilities. Environmental, Social and Governance Responsibilities ESG, as the foundation of our long-term strategy, not only provides a framework for solving a series of global challenges, but is fundamental to Alibaba’s journey towards lasting 102 years. We believe we can only create and sustain a profitable and prosperous business by bringing positive changes to the society. We are committed to assuming greater responsibility while pursuing business excellence as the operator of a platform economy. See “— Environmental, Social and Governance (ESG).” Our Businesses Taobao and Tmall Group China Commerce Retail We operate the largest retail commerce business in the world in terms of GMV in the twelve months ended March 31, 2024, according to Analysys. Our retail commerce businesses in China, primarily consisting of Taobao and Tmall, have become an important part of the everyday lives of consumers in China. Consumers can access our various marketplaces, channels, features and content within our ecosystem through the Taobao app. Empowered by our commerce technologies and services, we appeal to a massive base of consumers by providing them with diversified and comprehensive offerings at attractive prices in highly engaging and social formats. Business Overview 22 Alibaba Group Holding Limited
• Consumers. We serve a large and diversified consumer base in China, across both large cities and less-developed areas. We believe our platforms continue to appeal to consumers at various income levels and address all aspects of consumption needs. Our ability to offer and deliver value has driven increased consumer engagement over time. Generally, the longer the consumers have been with us, the more orders they tend to place across a more diverse range of product categories. Consumers on Taobao and Tmall continue to exhibit high retention. In fiscal year 2024, the number of annual active consumers who each spent more than RMB10,000 on China commerce retail marketplaces continued to increase. For fiscal year 2024, the retention rate of annual active consumers who each spent over RMB10,000 on China commerce retail marketplaces in the prior fiscal year stayed at a similar level compared to that of fiscal year 2023. • Products and Services. We believe our ecosystem offers the most comprehensive range of products and services among global commerce platforms to meet the diverse demands of our massive and diversified consumer base across different segments. We have developed a digital commerce infrastructure that offers an upgraded consumer experience by seamlessly integrating online and offline capabilities for our marketplaces and direct sales businesses. Consumers can enjoy a broad variety of quality products at different price levels with a wide selection of delivery options that satisfy their varying needs. The core capabilities that form the critical foundation of our digital commerce infrastructure include the following: — Product and supply chain capabilities. We believe our ecosystem provides the most comprehensive product and service offerings at attractive prices. Through the Taobao app, consumers can access products ranging from branded products and imported goods to products sourced directly from manufacturers and farms and to other long-tail products offered by our various marketplaces. For example, consumers may look for branded products, including luxury brands, trendy fashion brands and new brands, on Tmall, and imported products from around the world on Tmall Global. Xianyu, our consumerto-consumer community and marketplace for second-hand goods in China, enables consumers to find a wide variety of idle goods, recycled goods, consignment, items for rent, and other long-tail products. We also continue to go upstream to source products directly from manufacturers and farms to enhance our product selection, which we believe is key for us to satisfy all aspects of consumption needs. Business Overview 23 Fiscal Year 2024 Annual Report
— Fulfillment and delivery expertise. We have developed logistics expertise and capabilities that allow us to offer a full range of high-frequency fulfillment services to satisfy consumer demand. Our comprehensive delivery options include ondemand delivery, half-day delivery, sameor-next-day delivery and next-day pick-up services, which capture the varying needs of consumers living in large cities and less-developed areas. For example, Tmall Supermarket offers daily necessities, FMCG and general merchandise through Taobao app with same-or-next-day delivery services. • Consumer Experience. We aim to provide an immersive and personalized shopping experience with engaging content and quality service to our consumers. The massive amount of user and merchant activities taking place every day on our China commerce retail platforms generate significant consumer insights. By leveraging proprietary AI and data technologies, we are able to aggregate and build on deep consumer insights to provide more accurate search results and relevant recommendation feeds that enhance the shopping experience for our consumers. Our various commerce platforms also enable merchants to engage with consumers through a variety of formats, including livestreaming, short-form videos, interactive games and microblogs. We continue to introduce interactive features and innovative formats to facilitate user engagement with brands, merchants and content creators. Along with these features and formats, our relevant and engaging entertainment content plays an important role in consumers’ product discovery process and shopping journey, and drives user stickiness and retention on our various platforms. In addition, we are committed to providing consumers with quality services which we believe is key to our consumer-centric strategy. We also offer the subscription service 88VIP, a membership program that includes everyday coupons on selected items, free shipping coupons for returned goods and other benefits, to further enhance consumer experience on our marketplaces. Taobao and Tmall Taobao means “search for treasure” in Chinese. Taobao serves as the starting point and destination portal for many users’ shopping journey and provides a top-level traffic funnel that directs users to the various marketplaces, channels and features within our ecosystem. Through the Taobao app, consumers can also access display listings from Tmall merchants and brands, as well as our various other marketplaces, including: Xianyu that offers a variety of idle goods and long-tail products; Tmall Supermarket that offers daily necessities, FMCG and general merchandise; and Tmall Global that offers imported products from around the world, among others. Consumers from both large cities and less-developed areas come to Taobao to enjoy an engaging and personalized shopping experience, optimized by our data analytics and technology. Through highly relevant content, engaging and interactive formats and real-time updates from merchants, consumers can learn about products and new trends. They can also interact with each other and their favorite merchants and KOLs through a broad range of interactive features such as livestreaming and short-form videos. Tmall caters to consumers’ ever-growing demand for high-quality products and premium shopping experience. A large number of international and Chinese brands and retailers have established storefronts on Tmall. Tmall is the partner of choice for brands. Brands and retailers operate their own storefronts on Tmall with unique brand identities and look and feel, accompanied by full control over their own branding and merchandising. Because of the presence of a large number of brands and the stringent standards required for merchants, brands and retailers to join and operate on Tmall, a presence on Tmall has become a validation of quality, allowing merchants, brands and retailers to take advantage of our significant traffic to extend and build brand awareness and customer engagement. Major international brands that have physical operations in China are well represented on Tmall. Taobao and Tmall together constitute the world’s largest digital retail business in terms of GMV for the twelve months ended March 31, 2024, according to Analysys. Business Overview 24 Alibaba Group Holding Limited
“We have previously engaged with numerous livestreaming teams and invested in considerable resources but faced setbacks. After experimenting with different platforms and channels, we concluded that Taobao best fits our needs.” Min Qiu, Founder, Guifei handmade women’s footwear Factory owner leverages Taobao to directly reach consumers with their high-quality products Min Qiu, founder of Guifei handmade women’s footwear, opened a footwear factory jointly with her friends several years ago. The business focused on Original Equipment Manufacturer (OEM) production and offline wholesale of women’s footwear. In its business operations, Qiu faced challenges relating to long payment cycles from wholesalers and distributors, and supply chain issues. Qiu and her brother took advantage of the livestreaming trend and started livestreaming on Taobao to sell their products directly to consumers. Qiu capitalized on her wholesale cost basis and inventory advantages to offer value-for-money and high-quality products directly to consumers. With her down-to-earth style and expertise in shoemaking, her livestreams showcased her products’ advantages and craftsmanship, creating an immediate and vivid connection with consumers while establishing brand awareness. Taobao Live offers bespoke livestreaming tools, a simplified process for store setup, and online customer traffic support to bolster merchants in the industrial belt. These measures allow factories and entrepreneurs to focus on livestreaming and offer value-for-money, high-quality products to consumers directly from their factories. # Creating Possibilities # Innovation 25 Fiscal Year 2024 Annual Report
“The journey of entrepreneurship and innovation is always filled with unexpected challenges. We are always pleasantly surprised when we can view users' pain points from a different perspective. Tmall offers a comprehensive consumer and market insight system. With these digital operating tools, we can implement holistic operations that integrate consumer insights, R&D, market reach, and user retention. This enables us to precisely map our products to our target users and allows us to transition smoothly from rapid growth into sustainable solid development.” Di Zhang, Founder, seedshub Pet products have emerged as a growing consumer trend in recent years. Given the fierce competition landscape, it is difficult to stand out. Di Zhang, founder of seedshub, saw that pet-focused brands mainly catered to the daily food and basic needs of pets, often overlooking pet owners’ unique household cleaning requirements. Di Zhang founded seedshub with a consumer-oriented approach to create a specialized cleaning and care brand for pet-owning families. Using Tmall’s comprehensive consumer and market insights, seedshub has successfully introduced specialized cleaning products such as liquid laundry detergent, laundry detergent pod, and disinfectant tailored for families with pets. For the long-term steady development of the brand, seedshub has joined Tmall's new brand support plan, which allows it to target a specific group of pet consumers. As part of the plan, the membership program on Tmall helps brands enhance consumer mind share and improve user growth and retention across various channels. Through user interaction, seedshub has been developing new innovative products. Within six months after its launch on Tmall, the brand has earned positive reviews and recognition from KOLs and users. # Creating Possibilities # Innovation Pet brand leverages Tmall’s comprehensive operating and membership programs to create a niche category offering household cleaning products for pet owners 26 Alibaba Group Holding Limited
RkJQdWJsaXNoZXIy MjA2Njc2MQ==