The Alibaba Group Holding Ltd (BABA) IPO by Veibha Subramaniam, Capital Cube

The Alibaba Group Holding Ltd (NYSE:BABA) IPO – A slide presentation on relevant facts on the Chinese etail market and comparisons with Amazon.com, Inc. (NASDAQ:AMZN).

Alibaba IPO: Summary

  • China’s e-retail market is the fastest growing market globally and valued at $294 billion in 2013
  • The Chinese market is characterized with huge marketplaces and not independent merchants – Alibaba Group Holding Ltd (NYSE:BABA) is one of the largest with a user growth of 45% from 2012 – 2013 and has a transaction volume that is twice that of Amazon.com, Inc. (NASDAQ:AMZN), growing at a faster pace
  • In addition, the net profit margin is 24.34% in 2013 which is 11x that of Amazon that validates a premium valuation of $230 billion + (1x GMV)
  • Underserviced Tier 3 and Tier 4 cities in China are a huge opportunity for e-retailing

China etail market

Alibaba China etail market

  • China has the highest number of broadband connections with a penetration rate of only 30%
  • Increase of disposable income in tier -3 and Tier-4 cities will lead to increase in China’s etail sector

Alibaba chinese consumers

Alibaba china mega policies

  • China’s e-retail market grew from $120 billion in 2011 to $294 billion in 2013
  • This is a growth of 145% in 2 years

Alibaba and China

Alibaba china marketplace

  • China’s market place is dominated by Alibaba Group Holding Ltd (NYSE:BABA) as of 2013

Alibaba china marketplace

  • China is dominated by huge online marketplaces as compared to the US

Users

Alibaba users

  • Alibaba Group Holding Ltd (NYSE:BABA) has more active users as compared to Amazon.com, Inc. (NASDAQ:AMZN) given the size of the Chinese population and its penetration rate in China
  • Alibaba owes its massive scale to the sheer size of the Chinese market, home to more than 600 million Internet users
  • Despite decrease in user growth rate in the last year , Alibaba still maintains the highest growth rate amongst its peers

Gross Merchandise Value (GMV)

Alibaba GMV

  • Amazon.com, Inc. (NASDAQ:AMZN) has grown its GMV (includes its products and also 3rd party products) by 29.34% from 2012 – 2013.
  • eBay Inc (NASDAQ:EBAY) has grown its GMV by 12.89% in the same period
  • Also, Alibaba Group Holding Ltd (NYSE:BABA) has grown its GMV by 55.73% from 2013 – 2013
    • In 2013, the combined transaction volume of its consumer shopping sites in China reached $248 billion, according to its IPO filing last month. That is triple the size of eBay and more than double the size of Amazon.

The Alibaba Group Holding Ltd (BABA) IPO: Full Presentation

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