Alibaba reaches 1 trillion RMB ($157B) in sales to become biggest e-commerce company in the world

Alibaba reaches 1 trillion RMB ($157B) in sales to become biggest e-commerce company in the world

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December 3, 2012 7:39 AM

John Koetsier

Chinese e-commerce giant Alibaba sold one trillion RMB worth of goods in 2012, the company announced today.  That’s $157 billion U.S. in gross merchandise volume (GMV), which easily surpasses U.S e-commerce giants Amazon and eBay combined.

In fact, Alibaba chairman Jack Ma said only two companies have ever recorded annual transaction volumes at this level: Wal-Mart and Alibaba.

Alibaba — which recorded $3 billion in sales in a single day earlier this year — is a conglomerate primarily composed of Tmall, which manages e-commerce operations for thousands of companies in China, and Taobao Marketplace, a rough equivalent of eBay. All payments are handled by Alipay, the company’s own payments processor, and Alipay has over 700 million registered users — with credit card information.

The company has grown massively in the past four years as the Chinese middle class increases in size and wealth, and as it has become a hub for a massive share of Chinese e-commerce. E-commerce has been growing at 60 percent year-over-year in 2012 in China’s third and fourth-tier cities, the company says, and currently just over five percent of all Chinese retail spending – RMB 18.39 trillion — passes through Alibaba websites.

And it’s not looking backward, as chairman and CEO Jack Ma made clear:

“It’s very likely that next year our transaction volume will be bigger than all the American e-commerce companies combined,” Ma said in a company statement.

In 2012 so far, the company has accounted for an amazing 60 percent of all packages delivered in China — an astounding 12 million packages a day. That’s up from an average of eight million packages a day in 2011.

The company measures GMV, a sales equivalent that takes into account all product sold by clients who use Alibaba’s e-commerce infrastructure to enable their own sales, and all Chinese consumers or businesses that sell their products on Taobao’s marketplace. The measure is roughly equivalent to gross sales, but an important distinction is that most of the profits of each sale do not reside with Alibaba, which takes a small percentage. That’s not entirely dissimilar to Amazon, which facilitates the sale of many other companies’ products, or eBay, which takes a small percentage of any item you might sell on the site.

Alibaba is predicting three trillion RMB of total volume of sales through its various sites in 2017, which would be $471 billion, and would surpass Wal-Mart’s current sales of about $444 billion.

Amazon’s annual sales volumes are in the $50-60 billion range, with quarterly sales of $13 to $15 billion. eBay sold about $5 billion 2011 and is projecting about $8 billion in sales in 2012. The U.S e-commerce market, however, is much more fractured than the Chinese market, with many companies taking small slices of the overall pie.

Yahoo still owns a stake in Alibaba — about 23 percent after selling half of its shares for $7.6 billion earlier this year.

Ricardo’s Comment:

Please read the following comment :

Cathy Otto Othman • 3 days ago

“Now t-mall is where the real legitimate products are sold – but not by choice, brands are forced to sell on t-mall because if they dont – people will buy the fake products on taobao. “–does not make sense. Brands can sell in malls and shops if they do not want to sell them online. Some people want to buy real brand products in China, but some of them prefer cheap fake ones. They are two kinds of people. The first one will not buy fake products because the real ones are not sold online.

This bring an issue still unknown to many western brands: If your product is good , and it’s not available in China.. people will copy it and sell it. Thinking that China “will wait until I am ready to go” will not work , as it’s not the brand that is setting the agenda…

Read more at http://venturebeat.com/2012/12/03/alibaba-reaches-1-trillion-rmb-157b-in-sales-to-become-biggest-e-commerce-company-in-the-world/#1PF75DQwvCXBXVJ0.99

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