What Are The Key Sources of Revenue For Alibaba?

Alibaba’s (NYSE:BABA) China Commerce business, where revenues are derived from retail e-commerce and associated marketing services in China, is expected to contribute $49 billion to Alibaba’s fiscal 2020 (year ending March 2020) revenues, making up 65% of Alibaba’s $75 billion in revenues for fiscal 2020. The China Wholesale and Other Revenue is expected to be about 12% of total revenues, where wholesale commerce and logistics service revenues are primarily driven by Chinese consumption. Alibaba’s China Commerce business will provide $32 billion, that is 62% of $52 billion in total revenue the company is expected to add between fiscal 2017 to 2020. This China Commerce growth has been key to Alibaba’s 145% price appreciation during the same period, further helped by stable margins, and strong expansion in Alibaba’s valuation multiple. Alibaba’s revenue grew 144% over 2017-2019 to $56 billion and is expected to increase 78% to nearly $100 billion by 2021.

We have created an interactive dashboard on Alibaba Revenues: How Does It Make Money?, where we discuss Alibaba’s business model, followed by sections that review past performance and 2021 expectations for Alibaba’s revenue drivers and competitive comparisons with Amazon, Baidu, and Sina.

[1] China Commerce Division Revenue growth of about $5 billion over the next two years will be driven by growing need for digital transformation among brick and mortar stores in the world’s largest country by population.

[2] China Wholesale & Other Division Revenues to grow by about $4 billion over the next two years due to increase in logistics and wholesale business.

[3] Cloud Computing Division Revenues to grow by about $5 billion over the next two years due to increase in average revenue per customer, wider partnerships, and Alibaba’s launch of newer cloud products. Alibaba’s recently-launched SAAS accelerator helps deploy cloud native technologies across customer IT environments to speed up adoption of Alibaba’s cloud.

[D] International Commerce Division Revenues to grow by about $3.7 billion over the next two years due to increase in paying customers and growth in average revenue per customer.

[5] Digital Media & Innovation Initiatives Division Revenues to grow by about $2.7 billion over the next two years due to increase in local language content consumption. Over the next 2 years, we expect this segment revenues to increase by $2.7 billion – likely driven by continued growth in local language content consumption.

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