Alibaba reported its fourth quarter and fiscal year 2016 (quarter and year ending March 31, 2016) results today, on May 5, 2015. Alibaba reported a gross merchandise volume (GMV) of $485 billion in FY 2016. This is higher than $482 billion of revenues reported by Walmart in its fiscal year 2016, which ended on January 31, 2016. In this post, we will first compare the businesses of the two companies. Then, we will compare Alibaba GMV and Walmart revenues during their last four fiscal years.
Alibaba And Walmart Business Models Are Very Different
Following is a comparison of Alibaba and Walmart on key business model parameters and several other factors.
About Alibaba and Walmart
Alibaba is the world’s largest online and mobile commerce company in terms of GMV. Alibaba owns eCommerce marketplace platforms that enable individuals and businesses to buy and sell online. Alibaba does not engage in direct sales, compete with the merchants, or hold inventory.Alibaba operates the following retail marketplaces for consumers in China:
- Taobao Marketplace – China’s largest online shopping destination;Tmall Platform – China’s largest third-party platform for brands and retailers;Juhuasuan – China’s most popular group buying marketplace by its monthly active users.
In addition to these three marketplaces, Alibaba operates:
- Alibaba.com – Global wholesale marketplace;1688.com – China wholesale marketplace;AliExpress – Global consumer marketplace.
Walmart is the world’s largest brick-and-mortar retailer. Walmart has retail and wholesale operations in various formats around the world. The various retail formats include: supercenters, supermarkets, hypermarkets, warehouse clubs, cash & carry, home improvement, specialty electronics, restaurants, apparel stores, drug stores, and convenience stores, as well as digital retail.
Alibaba and Walmart – Scale Of Operations
At the end of Alibaba’s FY 2016 (fiscal year ending March 31, 2016), Alibaba had 423 million active buyers and 410 million mobile monthly active users (MAUs) using its platforms. As of March 31, 2016, Alibaba had a total of 36,450 employees. Nearly all of the were based in China.At the end of Walmart’s FY 2016 (fiscal year ending January 31, 2016), Walmart served nearly 260 million customers every week through 11,500 stores in 28 countries and eCommerce websites in 11 countries. Walmart has 2.3 million employees, which makes it one of the biggest employer in the world.Walmart.com experiences on average 85 million unique visits a month and offers access to approximately 8 million SKUs.
Alibaba and Walmart – Business Segments
Alibaba business operations are organized into following business segments: China Commerce, International Commerce, Cloud computing and Internet Infrastructure, and Others.China Commerce consists of China retail marketplaces (Taobao, Tmall, and Juhuasuan) and China wholesale marketplaces (1688.com). International commerce consists of International Retail Marketplaces (AliExpress) and International Wholesale Marketplaces (Alibaba.com).Walmart business operations are organized into three business segments: Walmart U.S., Walmart International, and Sam’s Club.
Alibaba and Walmart – GMV and Online Sales
Alibaba reports GMV as a measure of the volume of eCommerce enabled by its platform. GMV is defined as the total value of confirmed orders or closed transactions over their marketplace platforms, regardless of whether the buyer and the seller actually complete or settle the transaction. Alibaba reports GMV for China retail marketplaces only. During FY 2016, Alibaba GMV of the China retail marketplaces was $485 billion.To meet the increasing demand of online customers, Walmart has invested heavily on digital and mobile shopping platforms. Walmart eCommerce sales were $13.7 billion during its fiscal year 2016.
Alibaba and Walmart – How do they generate Revenues?
Alibaba generates revenue primarily from the following offerings: online marketing services where sellers pay them marketing fees to acquire user traffic; commissions based on GMV for transactions settled through Alipay; and membership fees and value added services.Walmart generates its revenues by directly selling products and services to individuals and business owners. Walmart sells products in the following key categories: Grocery, Health and wellness, Entertainment, Hardlines, Apparel, and Home products.
Alibaba and Walmart – Revenues, Profits, and Profit Margins
For the fiscal 2016, Alibaba reported total revenues of $15.7 billion. Alibaba operating profits were $4.5 billion and net profits were $11.1 billion. For the fiscal 2016, Alibaba gross profit margins were 66.0%, operating profit margins were 28.8%, and net profit margins were 70.7%. Alibaba’s fiscal 2016 net income is more than the operating income because it includes certain accounting gains in Interest and investment income.For the fiscal 2016, Walmart total revenues were $482.1 billion. Walmart operating profits were $24.1 billion and net profits were $14.7 billion.For the fiscal 2016, Walmart gross profit margins were 25.1%, operating profit margins were 5.0%, and net profit margins were 3.0%.
Alibaba and Walmart – Geographic Revenue Information
Alibaba derives substantially all of its revenue from China.During fiscal 2016, Walmart generated 74% of total revenues from U.S. operations and 26% of total revenues from International operations.
Alibaba and Walmart – Years of Operation
Alibaba was founded in 1999 and its shares started trading in New York Stock Exchange in 2014.Although Walmart was incorporated in Delaware in October 1969, the businesses conducted by Walmart founders began in 1945. Walmart shares started trading in New York Stock Exchange in 1972.
Alibaba GMV vs Walmart Revenues FY 2013 To FY 2016
Alibaba reported a GMV of $485 billion in FY 2016. This is higher than $482 billion of revenues reported by Walmart in its fiscal 2016. Mobile commerce in China has witnessed strong growth during last three years. As a result, Alibaba mobile GMV increased from just $13 billion in FY 2013 to $314 billion in FY 2016.
- Alibaba fiscal year ends in March. Walmart fiscal year ends in January.The source for Walmart revenues, profits, and other key business metrics is their latest annual report.The source for Alibaba GMV, revenues, profits, and other key business metrics are the financial and metrics available over Alibaba’s investor relations website. Alibaba reports GMV numbers in RMB – the legal currency of China. It also provides a convenience translation into US dollars, based upon the exchange rate at the end of the quarter set forth in the H.10 statistical release of the U.S. Federal Reserve Board. The U.S. dollar amounts of annual GMV and mobile GMV for each fiscal year represent the sums of GMV and mobile GMV, respectively, in U.S. dollars reported for the quarters of that fiscal year, each converted from the RMB amounts at the exchange rate as of the end of each relevant quarter.