Alibaba Group Holding Limited (NYSE:BABA) Q1 2020 Earnings Conference Call Transcript

Aug 15, 2019 • 07:30 am ET

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Alibaba Group Holding Limited (NYSE:BABA) Q1 2020 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Yes. Thank you. Ladies and gentlemen, we'll now begin the question-and-answer session. [Operator Instructions]

Our first question comes from the line of Eddie Leung of Bank of America Merrill Lynch. Please go ahead.

Analyst
Eddie Leung

Good evening. Thank you for taking my question, and congratulation on a good quarter. I have a question about the less-developed area strategy. Could you elaborate how you plan to differentiate from your competitors in the lower-tier cities? And then, just a follow-up, do you feel that there is a high degree of overlapping of your new customers from the less-developed areas with your other e-commerce companies, or do you think you are addressing a different user segment in those areas? Thank you.

Executive
Daniel Zhang

This is Daniel. Thanks for your question. As we said in our script, we are making good progress in user engagement and new customer acquisition. And during this quarter, we net added 20 million annual active consumers, and over 70% of them are from less-developed areas. And today, when we look at the consumer base we have, basically, we actually have two types of consumers. One is in top-tier cities and driven by the consumption upgrading and power and the growing demand from the middle-class families. The other is from the less-developed areas. And what we see is that because of the penetration of the mobile Internet, we see the citizens in the low-tier cities, they become fluent Internet users, and that they are trying various new business applications. Obviously, shopping and consumption is one of the -- both very important areas. And we want to -- actually they want to try it. So, that's why we make a lot of efforts in acquiring these new customers. And today, we are very happy to see that over half of the populations in less-developed areas are already the customers in the Alibaba ecosystem. But, we will continue our efforts to acquire more customers from these areas. But at the same time, as I've said before, we will do everything we can to cross-sell -- crossover the services in various categories and to fully leverage the existing user base we have on our platform. And the one more important point is that today, on our platform, we have very dynamic supplies from brand products and the products from the manufacturers. So, the power of the platform is to enable the new customers, they are quite in the low-tier cities, to access the various dynamic product supplies, which also not only meet their existing demand, but also create new demand from them.

So I think that is very, very important strategy for us to continue.

Analyst
Eddie Leung

That's very helpful, Daniel. Thank you.

Executive
Joseph Tsai

Sorry, I just wanted to supplement Daniel's point on the differentiated strategy in the less-developed areas. It just -- He talked about the shopping contacts. We have broad product selection, just much broader platform and also access to direct-to-factories, but also, if you look at the Alibaba ecosystem, there are, beyond e-commerce, we have local services that