Joe Tsai on FY2018 Earnings, New Retail and Growth Prospects

Alibaba Group reported its earnings for the fourth quarter and fiscal year ended March 31, 2018 today. Alibaba Executive Vice Chairman Joe Tsai opened the company’s analyst call with his thoughts on the figures, Alibaba’s New Retail strategy and how its investments position the group for future growth. The transcript follows:

We had excellent year in fiscal 2018. Overall revenues grew 58% year-over-year, and Taobao and Tmall GMV accelerated its growth from 22% last year to 28% this year.

I want to thank our team for a truly exceptional year. On these great results, I want to highlight a few things that demonstrate the success of our strategy and execution.

There are three things worth noting.

First, we gained incremental market share and a larger share of the consumer e-commerce wallet despite the law of large numbers.

How is that possible? Because through technology and consumer insights, we put the right products in front of the right customers at the right time.

We also executed tailored strategies in supply chain, product and merchant curation and logistics for key categories including apparel, FMCG, home appliances and consumer electronics.

The combination of our superior technology and operating excellence means we can continue to achieve substantial growth at scale, conquering the law of large numbers.

The second thing worth noting is that our New Retail initiatives are substantially growing Alibaba’s total addressable market in commerce.

In New Retail, we are anticipating changing consumer behavior and increasing expectations of quality and convenience whether they shop online or in offline stores.

Through our proprietary technology and operational implementation, we are enabling our retail partners to meet – and even exceed – these consumer expectations and capture incremental sales and operating efficiency. In this process of digitizing the entire retail operation, we are driving a massive transformation of the traditional retail industry. It is fair to say that our e-commerce platform is fast becoming the leading retail infrastructure of China

With this transformation, China’s five trillion US Dollars in retail sales will be available to Alibaba as our total addressable market.

The third thing worth noting is that Alibaba is well-positioned to capture more discretionary spend of Chinese consumers through entertainment and local service offerings beyond e-commerce.

Over the past year, we made substantial investments in our digital media and entertainment business. We strengthened our offerings in streaming content and subscription video services for an expanding viewership.

We also made a key strategic acquisition to take full control of, an online food ordering and delivery business that comes with a comprehensive local fulfillment and delivery network, which will help to power our New Retail strategy.

The substantial assets in entertainment and local services can leverage our user base of over 550 million annual active consumers in e-commerce.

We are extremely excited by the potential flywheel effects of expanding the wallet share of these 550 million users across our ecosystem, as well as the synergies and consumer insights that can be achieved through a technology platform built on the Alibaba technology infrastructure.