Annual Report 2009 - Alibaba

China Gold Supplier
Gold Supplier Starter Pack (“Starter Pack”), which we launched
at the end of 2008, proved to be a tremendous success in
delivering value at a widely accepted price point, helping
our small business exporters at just the right time. As of
December 31, 2009, we had a total of 96,110 China Gold
Supplier members, representing a historical record of annual
net addition of 53,082, or a 123.4% growth year-over-year. The
strong growth momentum in customer acquisition sustained
throughout 2009. In the fourth quarter, we recorded a quarterly
net addition of 11,242 China Gold Supplier members, or a
13.2% growth quarter-on-quarter. The overall performance
of this entry-level product was far better than what we had
originally anticipated, allowing us to reach our three-year
target in only three quarters. In general, the intrinsic value of
providing more services and tools to address the various needs
of businessperson on Alibaba.com’s platform has become
increasingly apparent.
We also proactively managed customer renewals and enhanced
customer satisfaction throughout the year by deploying more
resources in customer care and helping paying members
improve their performance. As such, we have seen improvement
in customer renewals of China Gold Supplier memberships
over the year, especially for our fi rst-year paying members.
In the fourth quarter of 2009, the fi rst batch of Starter Pack
members, which provided a notably large renewal base, was up
for renewal. We observed encouraging signs that the renewal of
this fi rst batch of Starter Pack members is stronger relative to
the like-for-like comparison of our fi rst-year paying members in
the past, though the net addition in the fourth quarter was lower
compared to the past three quarters due to a larger customer
renewal base.
In 2009, we made steady progress in both the development
of new VAS and the level of member adoption of VAS. VAS
revenue contribution from our China Gold Supplier members
has seen a slight, gradual increase throughout the year to
reach high-teens percentage at the end of the year. Although
we remain focused primarily on accelerating membership
acquisition and improving customer satisfaction in the near term,
we saw early signs of growing VAS adoption among renewed
Starter Pack members. This trend generally refl ects
our past observation that the longer a member stays with
Alibaba.com, the more likely they will consume VAS. We are
convinced that VAS penetration and usage will continue to grow
as we lay a solid membership base. Our strategy of maintaining
competitive membership fees in order to lower the entry
barrier for new customers and subsequently offering targeted
VAS to address different customer needs is seen as more
fl exible by our members. We believe separating VAS from the
basic membership will provide better value and measurement
for customers, which at the end will enhance the customer
satisfaction.
During the year, we signifi cantly enriched our VAS offerings to
Gold Supplier members. In the second quarter of 2009, we
introduced a VAS called “Japan Link” to China Gold Supplier
members. This VAS provides them with access to Japanese
buyers through the Alibaba Japan website.
Another important VAS initiative is “AliExpress,” a wholesale
platform we launched on our international marketplace in the
third quarter of 2009. We designed AliExpress to facilitate
small bulk transactions online. By integrating Alipay’s escrow
feature into the AliExpress platform, we provided an easy, safe
and secure online cross-border transaction service to buyers
and suppliers. We charge a nominal fee to the supplier for
successful online transactions. We believe e-commerce is an
irreversible trend and there will be more consumer-orientated,
Taobao-like platforms globally with a desire for direct access to
manufacturers. We have positioned AliExpress as a window to
consolidate the sourcing need of millions of e-tailers or powersellers
on various consumer-orientated e-commerce platforms
worldwide. Since its launch, we have witnessed steady growth,
though we consider AliExpress a strategic development rather
than a near-term revenue driver. We will focus on growing the
number of product offerings, users and their engagement on the
AliExpress platform in the coming quarters.
These are the examples of VAS we introduced in 2009. We
believe growth in VAS will follow after we have laid a solid
membership base and increased members’ reliance on and the
stickiness of our platform.
Global Gold Supplier and overseas development
In July 2009, we upgraded International TrustPass to
Global Gold Supplier. Priced at US$2,999 per year, Global Gold
Supplier offers similar product features and the same level of
exposure as China Gold Supplier. As of December 31, 2009, we
had 17,786 Global Gold Supplier members, representing a net
increase of 1,650 members during the year. The total number
of Global Gold Supplier members saw a slight decline in the
last two quarters of 2009. We expected this short-term impact
on membership, and we expect it may continue for a few more
quarters until the old membership base all adapt to the new
product and price level upon renewal. The impact of the mild
decline in customer numbers was more than compensated
for by the extent of the price increase. We believe Global Gold
Supplier will drive paying membership and revenue growth
globally in the long run.
In 2009, we extended our global footprint through various
modes of cooperation with strategic and channel partners
in close to 10 countries. Rather than further stretching our
resources, our strategy is to stay focused on a few countries,
including India, Japan, South Korea and Turkey, where we
have already established strong cooperation with partners
on the ground, or have good support from government or
trade associations. We have been making steady progress
in India and Japan. And in India, we also continue to lead
the B2B e-commerce market. As of the end of 2009, our
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