Alibaba Group - Q2 2023
November 17, 2022
Transcript
Operator (participant)
Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group September quarter 2022 results conference call. At this time, all participants are on listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Rob Lin, Head of Investor Relations of Alibaba Group. Please go ahead.
Robert Lin (Head of Investor Relations)
Thank you, and good day, everyone. Welcome to Alibaba Group's September quarter 2022 results conference call. With us are Daniel Zhang, Chairman and CEO, Joe Tsai, Executive Vice Chairman, Toby Xu, Chief Financial Officer. This call is also being webcasted from the I.R. section of our corporate website. A replay of the call will be available on our website later today. Now, let me quickly cover the safe harbor. Today's discussion may contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussion of these risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the U.S. SEC or announced on the website of Hong Kong Stock Exchange.
Any forward-looking statement that we make on this call are based on assumptions as of today, and we do not take any obligation to update these statements except for as required under applicable law. Please note that certain financial measures that we use on this call, such as adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP diluted earnings per share or ADS, and free cash flow, are expressed on a non-GAAP basis. Our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in our earnings press release. Unless otherwise noted, growth rates of all stated metrics mentioned during this call refer to year-over-year growth versus the same quarter last year. In addition, during today's call, management will give their prepared remarks in English. A third-party translator will provide simultaneous Chinese translation on another conference line.
Please refer to our press release for details. During the Q&A session, we will take questions in both English and Chinese, and the third-party translator will provide consecutive translation. All translations are for convenience purpose only. In the case of any discrepancy, management statements in the original language will prevail. With that, I will turn the call to Daniel.
Daniel Zhang (Chairman and CEO)
Thanks, Rob. Hello, everyone. Thank you for joining our earnings call today. We delivered a solid quarter in a macro environment full of uncertainty, the ongoing resurgence of COVID-19, geopolitical tension, inflation, and currency depreciation. The convergence of all these forces that created considerable difficulties for business operations. Despite these challenges, Alibaba's non-GAAP EBITDA increased 29% year-over-year as we continue to enhance our operational efficiencies. This is the result of our pursuit of high-quality development, and more importantly, demonstrates the resilience of the Alibaba business ecosystem. In the China domestic consumer market, Taobao Tmall GMV saw a low single-digit year-on-year decline this quarter, but the user traffic remains stable. However, consumption appetite was weak, and we saw a drop in purchasing frequency. The resurgence of COVID has affected one area after another, resulting in abnormal or suspended logistics service in different places.
This hurt merchant operations and consumer logistics experience. In terms of demand, the decline in categories such as apparel and consumer electronics slowed quarter-over-quarter. Interest-based categories such as outdoor recreation and pet care and health and wellness-related categories recognized positive growth. In this challenging environment, we have achieved relatively positive results through a committed execution of the following strategies. Number one, we work to ensure our user traffic population remains stable, DAU or MAU, by continuing to strengthen our user engagement. After many years of operation, Taobao Tmall is now deeply entrenched in our users' mind as the shopping destination. We are focused on user engagement on our platform by enhancing the customer journey across search, algorithm-driven discovery recommendations, live streaming, and other engagement features.
We stimulated consumption interest and drove conversion by highlighting the factors that influence purchase decisions through short-form video, photos, texts, and other means of communication. Number two, we further consolidate the scale and stickiness of our most valuable consumer group. For the 12 months ended December 30, 2022, the number of consumers who each spent over CNY 10,000 on Taobao and Tmall remain around 124 million with a retention rate of 98%. 88VIP membership population held steady at 25 million this quarter, with solid membership retention and a growth in GMV contribution. Number three, we improved consumer satisfaction by continually investing in customer service during and after sales. The logistics service experiences, such as doorstep delivery of orders as required. Our latest consumer satisfaction survey showed improvements in NPS scores relating to logistic and post-sales.
During our recent 11.11 Global Shopping Festival, Taobao Tmall's total GMV was in line with the performance last year during the same period. Initial fruits of the operation strategies outlined just now were seen during November 11. More than 600 million users engaged with our November 11-related contents, a single-digit growth year-on-year. Although the total number of buyers declined compared to the same period last year, the average GMV per person increased. As for our consumer profile, more than 98% of our 88VIP members bought something during November 11 season. Moreover, the contribution by 88VIP members to the total GMV continued to grow. Regarding product categories, consistent with what we observed during the rest of the quarter, interest-based categories such as outdoor recreations and pets and health-and-wellness-related categories, saw positive growth. Consumer electronics also enjoyed positive growth during November 11 season.
However, there are a few factors that negatively impacted our November 11 performance. Number one, average temperature across China was much warmer than usual for that time of year, and the delay in seasonal change weakened consumption appetite for apparel even more in an environment impact by COVID. Thus, the apparel category suffered. Number two, starting in October and through the 11.11 campaign period, nearly 15% of delivery areas across China experienced abnormal or suspended logistics services. This had a significant impact on the merchants' ability to fulfill orders on time and the delivery company's ability to make regular deliveries. Recently, we are seeing improvements. Number three, 11.11 has become an event celebrated and embraced by the entire society.
Given the uncertainties relating to the COVID-19, merchants were especially keen to take advantage of this opportunity to capture as much growth as possible across every available channel. Objectively speaking, they offer the consumer more choices, both online and offline. This quarter, the decline in Customer Management Revenue was higher than the decline in overall GMV. I would like to share the reasons. The first is the higher rate of order return because of, A, order return due to COVID-related impact on fulfillment and delivery. B, a higher order return rate that accompanies live-streaming-driven sales. C, the increasing convenience of making returns and improvements in user experience in returns handling on our platform. These three reasons collectively contribute to the rise in order return rate across the platform. Take rate calculation does not account order returns.
If it was accounted for, our take rate actually remain consistent. Second, page views from algorithm-driven discovery recommendations grow, but our monetization of traffic was less efficient, resulting in a lower take rate in the short term. Looking forward, we will adapt to the change in our user traffic composition and introduce better monetization products to ensure the long-term stability of our platform take rate. In our local consumer service segment, Ele.me proactively adjusted its business operation strategy to focus on user growth and retention on its mobile app. It continued to grow its market presence in key cities. At the same time, it continued to enhance operational efficiency and unit economics continued to see improvement. This is primarily due to the rise in average order value, leading to an increase in revenue and a reduction in logistic costs for order fulfillment.
AMap launched a new version of its maps this quarter, together with a series of new features, including a 3D city map, car lane-level road navigation, forecasting of traffic light signals, and road navigation for staying in the shade out of the sun, so on and so forth. User population and stickiness continue to strengthen in AMap, and a new historical record of 220 million DAU was registered during the week of the National Day holidays. On top of its map navigation, the services offered by AMap related to getting to destination, which includes ride hailing, hotel booking, gas station, and the EV recharging station, are all experiencing rapid development, with both service users and order volume enjoying faster growth. Cainiao's various business saw robust growth in this quarter, and there are clear improvements in cost efficiency.
Cainiao Post network grew by 20% year-on-year and now has more than 170,000 locations. It has comprehensive coverage in residential communities, school campuses, and the rural villages across China. Cainiao Post has become an important touchpoint for serving consumers. For overseas markets, Cainiao continued to actively build logistics hubs and nodes for further enhance its global logistics network service capability and efficiencies. In overseas market, the rise in logistics cost due to inflation and currency depreciation against the U.S. dollar has contributed to order volume decline of 12% year-on-year in our cross-border export business, AliExpress. In Southeast Asia, Lazada order volume declined 6% year-on-year as COVID-related restriction were lifted and offline shopping resumed. Trendyol's order volume grew over 65% year-on-year on the strength of its e-commerce business and fast-growing local consumer service.
For AliExpress and Lazada, we are taking steps to adjust our business model and investing in creating user value rather than just scaling. We are also continuing to strengthen our capabilities in logistics and supply chain. We believe that developing and investing in these capabilities will be meaningful to ensure the sustainable long-term development of our abilities to serve the overseas consumer market. In our cloud segment, Alibaba Cloud's revenue growth was 4% year-on-year this quarter. Through structural adjustments over the past few quarters, Alibaba Cloud's revenue structure is now healthier and more sustainable. Public cloud revenue grew double-digit year-on-year this quarter, while hybrid cloud declined. In the interest of pursuing high-quality growth, we proactively control the development of our business that only resell hosting infrastructure that has been commoditized in the market.
Looking at our revenue by industry, non-internet industry revenue grew 28% year-over-year. Its contribution to total revenue increased from 53% to 58% quarter-over-quarter. The fastest-growing sectors, including financial services, automotive, telecom, and public services. Looking ahead, Alibaba Cloud will leverage its proprietary cloud computing and big data processing capabilities to launch a range of industry solutions with relevant partners for advancing China's industrial digitization. At the Apsara Conference in early November, we unveiled many important technological achievements. It included our cloud infrastructure processing unit, i.e., CIPU, and an open-source platform under the Model-as-a-Service named the ModelScope. These will serve important purposes in Alibaba's Cloud's future development. In this environment full of uncertainty, our wide-ranging efforts in cost reduction and efficiency improvement measures are beginning to bear fruit.
Businesses such as Taobao Deals, Taocaicai, Ele.me, AMap, Lazada, and Youku have significantly reduced their losses. We will continue to focus on the steady improvement of business quality and on investing in building capabilities to provide customer core value rather than pursuing short-term business growth or user scale. As China enters an era of high-quality development, we will also enter a stage of high-quality business operations. During the eight years from Alibaba's IPO in September 2014, the quality and the scale of our business has improved significantly. Alibaba's revenue today is 12x what it was during the same period in 2014. Adjusted EBITDA is 4.5x what it was during the same period in 2014. Free cash flow is 4x that of what it was in 2014.
Over the past eight years, China's GDP has almost doubled from CNY 59 trillion in 2013 to CNY 114 trillion in 2021. We are confident about the future, and we will continue to execute our sharp share buyback program. As of November 16th, we have utilized approximately $18 billion to date towards share repurchase under our existing $25 billion program, with $7 billion more to go. In addition, our board has authorized us to upsize our existing share repurchase program by another $15 billion as a tangible action towards enhancing shareholder return. We remain confident about ourselves and even more about the future. No matter the ups and downs, we believe in the prospects of China's economic and social development.
We believe Alibaba's development goals are highly aligned with China's long-term goals. We believe Alibaba can play an important role in the digitalization process in China and around the world. We have taken note of the latest adjustment in China's COVID-related policies and proactive commentary from relevant government regulators about promoting the digital economy and the high-quality development of platform businesses. We believe that COVID will ultimately pass and our society, our economy, and our lives will eventually return to normal. That the massive potential of China as the world's second-largest economy will be further unleashed. Last but not least, we believe that platform economy that Alibaba is part of can make unique and valuable contributions towards serving small and medium businesses, creating employment and the pursuit of better lives. Thank you, everyone.
Let me pass the microphone to Toby, who will share the financial result with you.
Toby Xu (CFO)
Thank you, Daniel. Let me start with financial highlights for the quarter. This quarter, our total revenue was CNY 207 billion, an increase of 3% year-over-year. Income from operations for the quarter was CNY 25.1 billion, an increase of 68% or CNY 10.1 billion year-over-year, mainly driven by increase in adjusted EBITDA of CNY 8.1 billion and decrease in share-based compensation expense of CNY 2.3 billion. During September quarter, we have continued to improve operating performance of our loss-making businesses by enhancing operating efficiency and optimizing costs that resulted in 29% year-over-year increase in adjusted EBITDA to CNY 36.2 billion. Overall, adjusted EBITDA margin improved by 3 percentage points to 17%. Now let's look at cost trends as a percentage of revenue excluding SBC.
Cost of revenue ratio remains stable at 63% in September quarter. Our direct sales businesses and logistics services continued to grow, driving up our cost of inventory and logistics. We were able to keep our cost of revenue ratio stable primarily through optimizing traffic acquisition and improving subsidy efficiency. Product development expenses ratio remained stable during the quarter. Sales and marketing expenses ratio decreased two percentage points year-over-year to 11%, reflecting our continued efforts in optimizing user acquisition and user retention spending across our businesses. General and administrative expenses ratio remained stable at 4% in September quarter. Non-GAAP net income was CNY 33.8 billion, an increase of CNY 5.3 billion year-over-year, mainly due to increase in adjusted EBITDA, partly offset by decrease in equity pickup of our equity method investees results.
Our GAAP net loss was CNY 22.5 billion, a decline of CNY 25.8 billion year-over-year, primarily due to the increase in net loss arising from changes in fair value of our equity investments, partly offset by increase in non-GAAP net income. As of September 30, 2022, we continue to maintain a strong net cash position of CNY 323 billion, or $45 billion. Our strong net cash position is supported by healthy cash flow generation. In September 2022 quarter, cash from operating activities was CNY 47 billion, and free cash flow were CNY 36 billion respectively, which were up by CNY 11 billion and CNY 13 billion versus year ago.
Majority of the difference between operating cash flow and free cash flow is operating CapEx at CNY 11 billion, down by CNY 1.7 billion versus a year ago. Net cash outflow for investments and acquisition activities, net of inflow from disposals, significantly reduced to CNY 2.4 billion compared to CNY 21.5 billion in the same period last year. Importantly, on the current market conditions and given the confidence we have in the long-term sustainability of our business, we have been repurchasing our shares aggressively. For the fiscal first half ended September 30th, 2022, we repurchased approximately 62.9 million of our ADSs for approximately $5.6 billion, which is equivalent to about 70% of our free cash flow during the period.
From October 1st to November 16th, we have repurchased another $2.6 billion in ADSs on our share repurchase program. Our strong balance sheet and free cash flow give us the flexibility to execute this share repurchase program with confidence. Now let's look at our segment results. Revenue from China Commerce segment in September quarter was CNY 135 billion, a decrease of 1% year-over-year. Customer Management revenue decreased by 7% year-over-year to CNY 66.5 billion. Taobao and Tmall physical goods paid GMV declined by low single digits. Customer Management revenue is composed of advertising and commission revenue. Within the advertising, search advertising revenue continued to observe positive growth as it provides consistent return for merchants. While non-search advertising is negatively impacted by overall macro conditions and other factors.
Commission revenue also declined more than that of Tmall paid GMV due to higher order cancellations. Direct sales and others revenue grew 6% to CNY 65 billion, primarily driven by strong growth of our Freshippo and Alibaba Health's direct sales businesses. China commerce segment adjusted EBITDA increased by CNY 2.6 billion to CNY 44 billion in the quarter. The improvement reflected significant loss reduction from Taobao Deals, Taocaicai, and Freshippo, which on combined basis reached CNY 4.9 billion in September quarter. Segment EBITDA margin improved two percentage points year-over-year to 32% during this quarter. Segment EBITDA margin can be further segregated into three types of businesses. First, our existing marketplace business, including Taobao and Tmall, continue to exhibit stable EBITDA margin year-over-year.
Second, combined EBITDA margin of our direct sales businesses continues to improve, which was primarily driven by Freshippo during the quarter. Vast majority of Freshippo's existing stores has achieved cash flow positive. Lastly, new businesses including Taobao Deals and Taocaicai significantly reduced losses year-over-year as previously mentioned. Our international commerce segment revenue in September quarter was CNY 15.7 billion, an increase of 4% year-over-year. Revenue from international commerce retail business increased by 3% to CNY 10.7 billion. The increase was primarily driven by Trendyol as a result of its strong order growth of over 65%, partly offset by decrease in AliExpress order as a result of challenges faced in cross-border e-commerce demand in Europe due to depreciating euro and increasing logistic costs. Revenue from our Alibaba.com wholesale business grew 6% to CNY 5 billion.
The increase was primarily due to resilient 8% growth in value of transactions completed on Alibaba.com that led to an increase in revenue generated by cross-border-related value-added services. International commerce segment adjusted EBITDA loss narrowed by CNY 1.5 billion to CNY 960 million in September quarter. The significant loss reduction year-over-year was primarily contributed by the reduced losses from Lazada and Trendyol. Lazada has continued to improve monetization rate as well as enhancing operating efficiency. During the quarter, loss per order for Lazada narrowed by over 25% compared to the same period last year. While Trendyol's improvement is a combination of strong revenue growth despite forex headwind as well as enhanced operating efficiency.
Our local consumer service segment revenue in September quarter grew twenty-one percent to RMB 13 billion, primarily driven by strong revenue growth of AMap, as well as higher average order value and more efficient use of subsidies that were contra revenue of Ele.me. Local consumer service adjusted EBITDA loss reduced by RMB 3 billion year-over-year to RMB 3.5 Billion. Most of the loss reduction was driven by Ele.me business, while rest of the other businesses also recorded reduced losses. Ele.me continued to improve its unit economics per order by increasing average order value, reducing delivery cost per order, and optimizing user acquisition spending. Its UE continued to improve year-over-year and remained positive this quarter.
Revenue from Cainiao, after inter-segment elimination, grew 36% year-over-year to CNY 13.4 billion, primarily contributed by the increase in revenue from domestic consumer logistics services as a result of service model upgrade since later 2021 to enhance customer experience. Also the international fulfillment solution services revenue increased. In September quarter, 73% of Cainiao's total revenue was generated from external customers. Cainiao recorded adjusted EBITDA profit of CNY 125 million in September quarter, an increase of CNY 440 million year-over-year. Revenue from our cloud segment after inter-segment elimination was CNY 20.8 billion in September quarter, an increase of 4%, mainly driven by healthy public cloud growth, partially offset by declining hybrid cloud revenue as we continue to drive high quality recurring revenue growth.
Revenue growth for non-internet industries continued to accelerate, growing 28% and contributed 58% of overall cloud revenue. Strong revenue growth of the non-internet industries was driven by financial services, telecommunication, and public services industries. Revenue from customers in internet industry declined by 18%. That was mainly driven by declining revenue from the top internet customers that has gradually stopped using our overseas cloud service for its international business. Online education customers, as well as softening demand from other customers in China internet industry. Adjusted EBITDA of cloud segment, which comprised of Alibaba Cloud and DingTalk, was a profit of CNY 434 million in September quarter, increased by CNY 38 million year-over-year.
Revenue from our digital media and entertainment segment in September quarter was CNY 8.4 billion, an increase of 4%, primarily due to the increase in revenue from Alibaba Pictures, Youku, which was partly offset by decrease in online games business revenue. Adjusted EBITDA was a loss of CNY 117 million, reduced by CNY 814 million year-over-year, primarily driven by narrowing of losses from Youku and improved profitability of Alibaba Pictures. Youku continues to improve operational efficiency through disciplined investment in content and production capability. Its year-over-year losses have been narrowed for six consecutive quarters. Over the past several months, we have been preparing for our primary listing in Hong Kong. During this process, we are closely monitoring and taking into account various factors, including changing markets and other external conditions.
Before our conversion to primary listing in Hong Kong, we also need to formulate and submit a new employee stock ownership program to our shareholders for approval in order to comply with the newly amended rules in Hong Kong. The new ESOP program will continue to align the development of our company with the interests of our long-term shareholders. Accordingly, we will not complete a primary conversion before the end of 2022 as initially planned. We will continue to evaluate the various factors during this process and update our investors in due course. To wrap up, since I've taken up the CFO role early this year, I've met many shareholders, and I really appreciate all of your feedback. As I have communicated to many of you, we will proactively execute our capital allocations strategy to create and unlock our company's intrinsic value. We consider three important factors.
Firstly, we will be focused. We will not only continue to execute our three growth pillar strategy, but will also prioritize growing businesses that improve our medium to long term revenue growth and profitability profile. We remain confident of the growth prospects of our businesses, many of which are leading players in their respective markets. Second, in order to optimize our capital resources, we will continue to be more selective in M&A activities, monetize less strategic investments, and unlock the value of selected subsidiaries. Lastly, we want to better align our business performance to the interests of our long-term shareholders. During each of fiscal year 2022 and fiscal first half 2023 period, we have deployed around 70% of free cash flow to share buyback.
As of November 16th, 2022, we had repurchased approximately $18 billion of our shares under our existing $25 billion share repurchase program. In addition, our board of directors has approved to increase our existing share repurchase program by another $15 billion and extended the program through the end of March 2025. Currently, we have an unutilized amount of $22 billion under our upsized and extended share repurchase program. We hope our ongoing consistent share repurchase program will deliver attractive, consistent return to our long-term shareholders, especially during this period of extreme market volatility. Thank you. Now let's turn to Q&A.
Robert Lin (Head of Investor Relations)
Hi, everyone. For today's call, you are welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session, and our Manager will address your question the language you ask. Please note that the translation is for convenience purpose only. In the case of any discrepancy, our Manager's statement in the original language will prevail. If you are unable to hear the Chinese translation, bilingual transcript of the call will be available on our website within one week after the meeting. Operator, please connect speaker and S.I. conference lines now. Please start a Q&A session when ready. Thank you.
Operator (participant)
Thank you. Ladies and gentlemen.
Toby Xu (CFO)
Thank you.
Operator (participant)
We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star two. To give more people the opportunity to ask questions, please keep yourself to no more than one question at a time. Your first question comes from Ronald Keung from Goldman Sachs. Please go ahead.
Speaker 11
Thank you, Daniel, Toby, Joe and Rob. My question has to do with customer management revenues and GMV. We noted in your prepared remarks you stated that GMV during Double Eleven this year was consistent with that of last year. It seems there's an improvement there from the single-digit drop in the September quarter. Looking forward to the next several quarters as we anticipate more stabilization in the macro environment, can you share with us your view of how GMV may grow and also the CMR revenue? Thank you.
Ronald Keung (Managing Director)
好，谢谢。我来讲一下这个问题。其实我刚才在我的script里边已经详细讲了一下对这个CMR的问题的一些分析，也知道投资者也非常关心这个问题。其实对于今天我们看这个，我们的GMV，在这个疫情情况下，包括我们在整个电商的运营的手法的变动下，就销售方式的变动下，特别像直播这样的品类，直播这样的一个销售方式在迅速的发展的情况下，其实这个都会对综合的这个...
这个整个的平台的这个退货率产生一个影响。所以我想当讨论这个CMR的一个发展的时候，其实我们通常会把CMR和take rate一起去看，但实际上其实说这个这两个因素还有点不一样。第一个从take rate来讲，其实本质上因为它在CMR当中是有一部分是跟实际商家的基于退货以后的GMV跟它的销售佣金有关系，这一块其实我想是这个跟退货会有的退货率会有高度的关联。第二个从整个的这个广告的这个收入，在整个这个CMR中的这个表现来讲，这个它更首先还是跟这个宏观经济的情况，广告主的这个投入的意愿和这个广告主的或就是上我们的商家的整体的这个经营情况有关系。那我先停一下这里。
Speaker 11
Thank you. Well, in fact, in my prepared remarks earlier, I did offer some detailed analysis of the CMR issue, and I do understand this is an issue in which investors are very interested. Certainly when it comes to GMV in the context of the ongoing impact of the pandemic as well as ongoing changes in the way that goods are marketed and sold to consumers, in particular with the rapid increase in live streaming and growing importance of live streaming. There has been an overall impact on returns of purchases on the platform.
Typically, when we talk about CMR, we do talk about that in conjunction with the issue of returns. There are some differences between the two pieces. First of all, when it comes to take rate, we talk about CMR, and that's connected with post-return GMV. The amount of returns will be highly correlated with that. The second piece is advertising revenue. In the current macro environment, certainly there's reduced willingness on the part of merchants to invest as well as the macro environment impact on the merchants' own business.
Toby Xu (CFO)
第二个，从我们自身来讲，我们还是积极地把这个整个的CMR的收入作为一个结果，这个最重要的是能够为商家提供他们去在平台上经营他们的消费者、经营他们的用户的一个手段。无论是跟我们今天的原来大家都熟悉的付费搜索，包括近年来发展的这个推荐，和在最近在高速兴起的这个直播等销售方式、经营活动能够高度的相关。这样的话，这个对我们来讲都是去实现这个帮助商家去更好地经营他的消费者、经营他的用户的一种方式，最终来实现我们CMR的增长。在这条路上，我们的道路和前景是非常清晰的。好，谢谢。
Speaker 11
Secondly, in terms of our own focus on growing CMR revenue, this should really be a result of all of the efforts that we make to help merchants better engage consumers on the platform and drive their sales. Be it in terms of paid search with which everyone is very familiar and more recently, smart recommendations and live streaming that has grown very rapidly lately. These are all different ways that we can enable merchants to better engage with their consumers and to drive their sales. The results of achieving that success should be reflected in our CMR revenues.
Robert Lin (Head of Investor Relations)
Operator, next question.
Operator (participant)
Thank you. The next question comes from Thomas Chong from Jefferies. Please go ahead.
Thomas Chong (Managing Director and Equity Research Analyst)
晚上好，谢谢管理层接受我的提问。刚刚Daniel总你都提到就是有好几个factor来影响到11.11那边，第一个就是物流的影响，因为我们也看到广东还有全国的疫情都是比较严重的。我想问一下，就是我们应该怎么看，这个December quarter不同factor的影响，就是物流那边就会影响到order cancellation，就是这个退货，然后直播那边也会影响到那个product returns那边，还有就是这个消费者的情绪。如果我们要做一个排序的话，对CMR的影响或者是GMV的影响，我们应该怎么去考虑到消费者的情绪，然后疫情对物流的影响，还有就是直播的那个退货率的三个影响的一个排序？然后第二个问题也是看到了我们China Commerce的那个EBITDA做得非常好，有6%的一个增长。我想问一下，就是说在短期内看到了宏观的不明朗，就是CMR，如果受到这些不同的一些宏观的影响的话，对我们的EBITDA的影响会有多大？谢谢。
Speaker 11
Thank you, management. Daniel spoke earlier about several factors that affected performance this year during Double Eleven. Certainly, we noted on the logistics side, there were some serious disruptions in various regions in China. I'm wondering, looking at the December quarter, you know, how would you rank the impact of these different factors if you're going to order them? You know, looking at order cancellations as one factor related to live streaming, also just consumer sentiment, and also the ongoing impact of the pandemic. If you're going to order those factors in order of importance, what would that look like? Secondly, we saw on the China commerce side that very good results were achieved in terms of EBITDA with a 6% increase there.
In the short term, I'm wondering if you could talk a little more about, you know, if CMR is impacted on an ongoing basis by these macro factors, how big an impact that could be expected to have on EBITDA. Thank you.
Thank you. Well, you know, as regards to those three situations or three factors that you summarized in your question, they all have an impact, but I think the relative impact of those factors is in a process of flux, dynamic change. If I absolutely had to rank them, I would say, and this would be true for any enterprise or certainly any platform, that it would be the macro environment that we find ourselves in, which in turn has an impact on consumer confidence, consumer demand, consumer willingness to spend.
I think the macro environment would be the primary determinant, not just for Alibaba, but for all the players in the consumption space, both online and offline. And then, on the second piece to this is with the introduction of the, 20 measures, from the state authorities, that can be expected to have a positive impact. We certainly do note, still some ongoing disruption to logistics in certain regions of the country, but overall, we do expect things to continue to improve in a positive direction. But at the end of the day, we do need that kind of balance to ensure a good consumer experience and also to ensure that costs remain acceptable to merchants. So it is about finding that right balance.
Toby Xu (CFO)
对于您刚才第二个问题，我想我很快来回答一下，您的问题是关于整体的CMR收入的下降，是不是会对整个中国商业零售板块的利润产生影响。那回来的话肯定是每一个收入的一定的下降都会对利润产生一定的影响。但正常你看到的我们在中国商业零售板块整个的EBITDA其实在过去的一个季度跟去年比是一个上升，那这个当中最主要的控制还是对于所有业务的在投入上的控制，跟包括投入效率的提升而实现的，不管是在原来盈利的业务的盈利的提升，还是最亏损业务的亏损的下降，而最终实现了整个板块的EBITDA的差不多六个点的整个的一个提升。
Speaker 11
This is Toby. I'd like to add to that with regards to your second question, which had to do with the impact of the reduction in CMR revenue potentially on China commerce profit going forward. Look, a reduction in any revenue stream would of course have an impact on profit at the end of the day. However, if you look at China commerce EBITDA in this quarter, it was up, there was a positive increase year-over-year compared to the same quarter last year. We've achieved that by being very disciplined in our spending and investment and also in driving higher levels of efficiency.
This increase in core commerce EBITDA has been driven by an increase in profit in the profitable parts of the business, as well as by achieving narrowing of losses in the parts that were making losses. That's why you do see that increase of around 6%.
Robert Lin (Head of Investor Relations)
Next question.
Operator (participant)
Thank you. The next question is from Eddie Leung from Bank of America Merrill Lynch. Please go ahead.
Eddie Leung (Managing Director and Equity Research Analyst)
晚上好。有一个假设的问题。如果我们假设疫情管控的一些方向有一个比较大的调整，想问一问管理团队觉得对我们不同产品类型的，好或是坏的影响大概是怎么样？然后，我们作为一个公司来讲，有没有一些准备的工作，可能就是准备可能对未来疫情的管控措施，有一些这方向上的改变，谢谢。
Speaker 11
Thank you. Good evening, management. I'd like to ask you a hypothetical question. I'm wondering if, going forward, there is a relatively large adjustment in pandemic control measures in China, how would that kind of adjustment impact on different businesses or different product types, and would the impact be positive or negative? Related to that, I'm wondering if there are any preparations that Alibaba might be making or could be making as a company to better position itself for that future prospect of a major change in pandemic control restrictions? Thank you.
Daniel Zhang (Chairman and CEO)
好，谢谢Eddie，我说一下，我觉得非常好的问题。其实这个我们每个人都盼，盼望疫情尽快结束，然后那个社会经济生活啊都恢复到正常。那我想如果疫情缓解，啊这个社会经济活动啊，包括这个生活方面能够改善的话，那就是那个生活节奏能正常的话，那我觉得肯定整体对不仅对阿里，对所有人都是一个好消息。啊当然对阿里来讲，我们因为是有多个业务组成的这么一个团体，啊所以在每个业务上，对疫情的情况啊不太一样。
Speaker 11
Well, thanks very much for what really is a very good question. Certainly I'm sure that we all hope to see an end to the pandemic and a complete return to normalcy for society, for the economy, for our own daily lives. There's nothing that people would want more than to get back to normal, and that would be good news for Alibaba. It would be good news for everyone. Now, certainly Alibaba's businesses are diverse and would be impacted in different ways.
Daniel Zhang (Chairman and CEO)
那我想对我们的消费领域来讲，最重要的我觉得疫情缓解以后，就是当生活恢复正常，特别是工作恢复正常，这个更多的就业机会以后，其实消费信心的增强，我认为是对中国经济也好，对包括像阿里这样的企业也好，我想都是一个正面的作用。这个最终消费还是非常重要的，来推动经济发展的一个重要的引擎。当然要消费当然是需要对未来有——对消费者来讲对未来要有信心，对未来要有稳定的预期，对自己的收入要有稳定的预期。所以在这个情况下，如果能够疫情的改善，一定会对这方面的心理预期和信心起到一个正面的作用，也能够促进到消费。
Speaker 11
Talking about the consumption part of our business first, I think most importantly, were there to be an end to the pandemic and a complete return to normal life and normal work in particular, that would result in a big boost to consumer confidence, and that would certainly be very positive for the Chinese economy as a whole and also for companies like Alibaba. Consumption is an important engine of economic growth, but for consumers to spend, they need to have confidence and they need to have stable expectations, including stable expectations regarding their own future income. Were the pandemic to end, the controls to end, that would, I believe, result in a big boost to that kind of confidence resulting in higher consumer spending and also further stimulating the economy. Good news all around.
Secondly, I would say that you could expect to see an impact on the consumption mix. In the context of the pandemic and with all the uncertainty, there's been an increased focus on non-discretionary consumption, on daily essentials, food, groceries, things of this nature. You've of course seen a lot of demand for stocking up with people worried about potential supply disruptions, lack of access to necessities and essentials. A lot of demand for people to stock up. Now of course, were the situation to change, were the pandemic to ease, then I think you could certainly expect to see a corresponding increase in discretionary type of spending. That would be a change we could expect to see.
Secondly, if we look at our B2B businesses, for example, cloud computing, you know, I think certainly all enterprises across the board understand that digitalization is the future. At the same time, how much they will invest in any period does come down to their own current business performance and their expectations of the future. Companies have to decide how much they're willing to invest, and they have to be sure they're living within their means. I think after the pandemic is over, things have returned to normal, we would expect to see companies gaining more confidence in their future growth prospects and being willing to devote more resources to digitalization. I think that would be good news for our cloud business.
For Alibaba, I do think it's important that we always be looking to the future and of course hold out hope for the future. In terms of our consumer-oriented categories and offerings, we're already very complete and we will continue to look forward to rolling out and developing new categories going forward at the end of the pandemic. Not just goods, but also services, including travel and tourism services. At the same time, we need to continue to maintain a proactive approach to developing new digital offerings and solutions and to rolling out cloud-based solutions that help and empower customers to generate data, to leverage their data, and to extract value from their data. I think this will all be very positive going forward.
Robert Lin (Head of Investor Relations)
Thank you. Next question.
Operator (participant)
Thank you. The next question is from Alex Yao from JPMorgan. Please go ahead.
Daniel Zhang (Chairman and CEO)
Uh.
Alex Yao (Equity Research Analyst)
Daniel 在 prepared remarks 谈 到 了 ， 我 们 阿 里 巴 巴 长 期 的 发 展 和 国 家 的 长 期 目 标 是 紧 密 一 致 的 。 我 们 会 积 极 参 与 到 国 家 的 这 个 数 字 化 发 展 的 进 程 里 面 来 。 您 觉 得 现 在 ， 基 于 现 在 的 这 个 政 治 环 境 、 监 管 环 境 下 面 ， 您 觉 得 中 国 未 来 ， 比 如 说 五 年 的 这 个 数 字 化 进 程 是 什 么 样 的 一 个 方 向 ， 什 么 样 的 一 个 节 奏 ？ 然 后 在 这 个 大 的 进 程 里 面 ， 我 们 阿 里 巴 巴 可 以 做 些 什 么 ？ 然 后 这 个 财 务 的 回 报 ， 怎 么 看 ？ 谢 谢 。
Speaker 11
Thank you. Daniel, in your prepared remarks, you spoke about how Alibaba's long-term development is highly aligned with China's overall long-term development strategy and direction, including around digitalization. I'm wondering in the context of the current global regulatory environment, how you see digitalization playing out in future, say in the next five years in China in terms of its direction, in terms of its pace, what can Alibaba do as part of that process, and what kind of financial returns can Alibaba reap? Thank you.
Daniel Zhang (Chairman and CEO)
这个战略的发展，特别像二十大提出来的，走向网络强国、数字中国这样的一个发展目标，其实是高度吻合的。今天我想我们对于阿里来讲，我在前不久的乌镇互联网大会上也讲了，对阿里来讲，我们二十三年来我们做的事情，第一个做了流通领域的数字化，推动了流通领域的数字化，其实是实体经济能够通过更好地建立流通市场、流通渠道，建立全数字化的流通市场、流通渠道，去服务消费者，服务最终的客户。为了做好这件事情，同时又做了我们的数字化为支撑的物流的体系，让整个物流的流转、供应链更高效流转，让货通天下，推动货通天下的实现。今天中国也已经成为全世界快递最发达的国家，无论在我们的包裹的数量上，还是在我们的经营质量上，都是全世界最发达的。那第三个，在近五到十年来，其实我们积极投入到云计算，因为我们坚定地相信实体经济走向数字化的未来，这是各行各业的共识。今天无论从中国的数字化的防疫，还是到各个产业的走向全部的数字化，其实我想都体现了，无论从公共服务领域，到城市管理，到各个企业、各个产业的数字化进程，这是我们高度的共识。所以在这个上面，我们对于阿里的发展的未来，服务好中国实体经济，走向数字化，用好数字化的技术，能够进一步长期发展，我想是我们的一个坚定的信心所在。同时我们也通过我们自己不断的技术的能力的提升，让科技的能力进一步提升，以云计算为载体，更好地做好技术，服务于实体经济，服务于产业数字化的进程这样的一个工作。所以从这个意义上来讲，我们对于国家大的发展目标中间，阿里在中间，我们能参与其中，我们能做的贡献和发挥的作用，我们有充分的信心。我们也看到近期国家出台了一系列的政策，包括对于平台经济高质量的发展这样的一些政策和一些判断，我想我们也是非常的鼓舞，也是希望能够在这样的一个过程当中，能够进一步发挥阿里的作用，能够为国家的发展，为实体经济的发展，助力实体经济，做好我们的工作。谢谢。
Speaker 11
Well, when it comes to Alibaba's view of the future, the big picture of the future, we are of course strongly committed to our three key strategies of cloud computing, consumption and globalization. Of course, we do note the important emphasis given at the latest 20th Party Congress with the intention of helping China develop into a strong player in internet industries with a strong digital economy. I think that Alibaba is very well positioned to contribute to the realization of those goals. If you look back at Alibaba's history as a company around the internet.
The first thing we did was in the field of retail commerce and enabling digital flows of goods to consumers in the real economy, serving consumers with digitalization in that way. The second thing we did was bring digitalization to logistics, making it possible with high efficiency and high effectiveness to ship goods all over the country. In fact, China today is now probably the number one country in the world when it comes to express delivery services, not only in terms of the number of parcels but also the quality of services as well. Thirdly, over the last five-10 years, we've been very focused on investing in cloud computing and helping companies go digital.
Not just companies though, but public services as well, enterprise management, as well as the digitalization of industry. All of this is served by our cloud computing offerings. Going forward, we do indeed feel that as a company, we're highly aligned with that overall direction in China to continue to empower this process of digitalization and to harness the benefits of digitalization as part of this long-term development process. Alibaba as a company, has tremendous confidence in our ability to do precisely that, to provide the technologies that will empower the real economy to create further value through digitalization. We do feel very encouraged about that overall policy direction.
We also are positively encouraged by other comments that we've seen from state authorities, including talking about the high-quality development of platform economies. Alibaba looks forward to playing an important role in all of these developments going forward and have confidence that we will.
Robert Lin (Head of Investor Relations)
Okay. Next question.
Operator (participant)
Thank you. The next question is from Jerry Liu from UBS. Please go ahead.
Jerry Liu (Head of China Internet Research)
Thank you. Management and good evening. I'd like to come back, if we could, to a topic we addressed earlier in the discussion, which was about the take rate and the company's ability to monetize traffic. I'm wondering if you could tell us, please, what your view is over the next few quarters or say, over the next year in the company's ability to monetize this traffic. Thank you.
Thank you. Management and good evening. I'd like to come back, if we could, to a topic we addressed earlier in the discussion, which was about the take rate and the company's ability to monetize this traffic. Thank you.
Daniel Zhang (Chairman and CEO)
Thank you. Well, you know, the topic of monetizing traffic is one of perennial interest, of course, to investors. We've taken many questions on this topic over the years. It's not a question that we look at alone in isolation. It's all really more about how we help merchants and how we create value for merchants, enabling merchants to achieve ROI, and then we can share part of that ROI. That's our basic take and our basic objective on this. Secondly, when you look at, for example, the Taobao mobile app today, there's, you know, more diversity in terms of the way consumers are interacting through that app with different routes to purchase as I mentioned in my earlier remarks.
You have, of course, search, and now you have recommendation feeds that are becoming smarter and smarter, as well as other kinds of discovery functions, including live streaming and short-form videos, and all of that. These represent new formats or new scenarios for consumption. Of course, we are monitoring structural changes that are underway in terms of the frequency and concentration and traffic around those different kinds of interactions on the consumer commerce side. At the end of the day, it's still about us helping to create value for merchants, helping them to connect with those consumers, be it by a search, by a recommendation, videos, or another formats.
We are tracking behavior around those discovery-related formats, looking at consumer behavior, PVs, and can and will, going forward, consider ways to change the monetization model in line with this kind of evolution. At the end of the day, it's really about providing a reliable and effective service to merchants to help them serve the consumers.
Robert Lin (Head of Investor Relations)
Thanks. Next question.
Operator (participant)
Thank you. The next question is from Alicia Yap from Citigroup. Please go ahead.
Alicia Yap (Equity Research Analyst)
Hi. Thank you.
我想跟进一下，就是对于整个大品牌跟长尾的这些商家，他们对于在我们平台上做广告预算的一些分配的这些行为，在最近这几个月，versus就是疫情之前的一些改变，或者是有什么的一个变化。譬如说他们会把多少的这个他们想要做的营销预算分配给这个搜索或者是这个推荐，然后就是大的商家跟小的这个长尾的这个中小商家的一个区别，在疫情前跟现在的情况有哪一些改变？然后跟进一下，就是Daniel这边讲到这个直播是其中一个营销的模式，能不能意味着因为这个其实可能带动给商家更方便或者是多形式。但是从我们平台的这个变现的这个take rate，直播这边是不是会比这个搜索跟这个推荐内容这个是要低一点？好，谢谢。
Speaker 11
Thank you. Good evening, management. I'm wondering, first of all, if you could talk to us a little bit about advertising marketing budget allocation and changes that you may have seen there in the past few months, in particular compared against the period before the pandemic in terms of big brands, large brands, and then the long tail merchants. You know, for example, what proportion of their marketing budget are big brands versus smaller merchants allocating to different formats, for example, to paid search versus recommendations?
By way of follow-up, I was wondering if Daniel could tell us a bit about the take rate for live streaming versus search and recommendations, if the take rate for live streaming would happen to be lower than those other formats. Because you were talking about live streaming as one marketing format that could bring more convenience to merchants and be one more format, I'd like to know about the take rate. Thank you.
Daniel Zhang (Chairman and CEO)
好，那我两个问题分开讲一下，Alicia。第一个呢，我觉得就是说其实对于疫情当中这个品牌的广告的这个行为，这个营销预算的这个行为，我想无论大中小商家在这样的一个，在一个这个不确定性的一个疫情环境下，经营不确定性的环境下，总体我们看到还是它的这个营销投入更加谨慎，更加谨慎。这个其实没有所谓，我认为没有所谓大中小之分，因为总体上都会更谨慎。因为所有商家从经营上来讲，营销的预算的支出一定是他预计的收入的一个百分比。这个无论按季度、按年都是这样。所以这个角度，当对收入的预期有不确定的时候，营销预算一定会更谨慎，无论大中小都会是这样。那第二，我想在这个里边最大的变化我觉得还是商家对于效果的追求，对于营销效果的追求，可能对以往有更高的要求。这个纯品牌类的投入，纯曝光展现类的投入，我们看到的情况是商家会更加谨慎，相对于效果类会更加谨慎。对效果类的广告的整个的ROI的追求要求会更高。这个也是符合这个商家从商家经营上寻求更好的确定性。在疫情环境下，在经济不确定的环境下的这个确定性的要求。我想这个是我回答一下你第一个问题。而在这个问题上，对阿里来讲，我们因为既是一个消费媒体，又是一个消费的商家的经营阵地。这两个同时合一的这么一个方式。并且已经形成了这个商家完整持续经营，而不是卖中心经营，是持续经营的方法论。和这个盈利模式。所以对商家来讲，我想跟这个淘宝、天猫这样的结合，这个我觉得是一个，这个是他们一个重要的一个经营的主阵地。这样的一个position我觉得今天我们看到在疫情环境下更加重要，更加重要。就像这个商家也许会都去探索一些任何有新的这个平台或者新的通路的时候都会去做探索，因为谁都想追求增量。最后发觉追求增量，这个中间付出的ROI长期来讲能不能稳定，能不能可持续，我想这个是所有商家在特别的疫情环境下都会做更谨慎的判断的一个角度。所以这是第一个问题。第二个问，这个先翻译一下。
Speaker 11
Thank you. Let me divide this into a few pieces. When it comes to marketing budgets, and I think this is true of all kinds of merchants, large, medium or small, in the context of the pandemic and considerable uncertainty.
I think that all categories of merchants have become more prudent with regard to their spending on marketing. Because any company, regardless of its size, small, medium, large, is certainly going to be allocating a marketing budget as a percentage of its expected future revenues, be it in a quarter or be it in a year. In the context of the pandemic, with heightened uncertainty around expected future revenue, of course there's going to be an impact on marketing budgets for all kinds of companies alike. I think secondly, a change that you have seen following the pandemic is higher demands around ROI.
Also a function of merchants being more prudent. They want to ensure that the advertising they're paying for is being effective and paying off in terms of ROI. Certainly a more cautious approach, especially to things like display advertising. Merchants, advertisers are looking for more certainty amidst all of the uncertainty brought about by the pandemic. Alibaba is of course very well positioned as both a consumer media and also a platform.
The major platform for merchant operations in China. It's a place that merchants can come and achieve sustainable ongoing business operations and success and be empowered with a whole variety of different tools to do that. That's why Taobao and Tmall continue to be the primary place for merchants to come and do business. Now, of course, merchants are always going to explore new formats, new models, new platforms for that matter, that crop up because they're always looking to achieve incremental growth in their business. At the end of the day, they will be looking at the ROI they're achieving and the sustainability of their investment in gaining that incremental new business.
Daniel Zhang (Chairman and CEO)
关于第二个问题，就是关于直播的方式下的take rate的问题。其实对阿里来讲，我们的直播有两种。一种是作为一个店家，他本来在我们这里就经营这样的一个网店，他直接他的雇员或者他请的第三方在这个店里，以店铺的身份进行直播。第二种，这个是我们独有的方式。第二种是，一些我们叫opinion leader，我们叫达人，他作为一个纯粹的推广者，他来帮助不同的店铺来进行直播，在达人自己的直播间直播。所以在这两个方式下，我们都有不同的商业协议，来进行一个收入的take rate的分享。所以从这个角度来讲，直播本身占我们整体的生意的比重的大小，跟阿里作为一个平台，我们的商业化收入的高低并没有直接关系。所以我就简单回答一下。谢谢。
Robert Lin (Head of Investor Relations)
Okay, thank you. Will take the last question.
Speaker 11
Sorry Rob.
Robert Lin (Head of Investor Relations)
Go ahead.
Speaker 11
Yeah. The second part of your question, Alicia, had to do with the take rate on live streaming. You know, Alibaba has two different kinds of live streaming. The first kind is merchant live streaming. This is where you have a merchant store online with an employee or a third-party person engaged by the merchant doing live streaming as the store. That's something unique to Alibaba. Secondly, we have live streaming by opinion leaders. In Chinese, we call them Daren. They're running their own live stream on which they can give visibility to and promote other merchants. We have agreements in place to ensure that we're sharing an incremental revenue growth via a take rate. That is our model.
Robert Lin (Head of Investor Relations)
Last question, please.
Operator (participant)
Thank you. The final question comes from Jiong Shao from Barclays. Please go ahead.
Jiong Shao (Managing Director)
谢谢管理层 take 我的问题。晚上好。我的问题是关于菜鸟。那么菜鸟这个季度表现非常好，对吧？YoY 增长 30% 多。你们在 PR 里面简单地说了一两个原因，那我希望能够多讲一点，把它展开讲一下，这个强劲增长的原因是什么？然后呢，related 这菜鸟，前面 Toby 也说了这个 unlock share 后的 value。那么现在菜鸟 73% 的收入，已经是 external 的，那么我们在这个 potentially 这个 spin off 菜鸟这个方面，我们应该怎么想这个问题？谢谢。
好，谢谢您的。
Speaker 11
Thank you very much. Good evening, Management. My questions have to do with Cainiao, which we see has had very good performance with growth of over 30% in revenue. A very robust performance this quarter. I'm wondering if you could expand on that a bit and talk to us about some of the reasons that are driving that growth. Also given now that, you know, over 70% of Cainiao total revenue is external being generated by external customers, if you could talk to us about the prospects for a potential spin-off of Cainiao. Thank you.
Toby Xu (CFO)
好，谢谢您的问题。第一个问题我先来回答您一下，第二个问题Daniel会回答您一下。第一个问题是关于菜鸟的整个收入的增长，那这个季度确实菜鸟的整体收入增长了36%。那我刚才在我的script里面讲到过，这个当中的增长最主要两部分，第一部分是在境内的consumer logistics service里的一个比较大的增长，同时也包括了跨境的物流的收入的增长。那么这块当中最主要的增长，比较大的增长是来自本地的consumer logistics的服务的增长。我刚才里面提到了这个服务的增长当中最重要的一块是在整个服务的模型的一个提升。那么之前的一个模型更多的您可以理解是一个3PL的模型，而现在已经upgrade到了一个4PL的模型，这个当中一方面我觉得是通过更多的，我们过去不只是一个连接服务商到一个最终的客户的这样一个模式，我们现在更多的是在这个过程当中，通过购买服务商的服务，最终直接服务最终的客户，这个当中我们会承担更多的责任，包括很多的服务体验给到我们的客户。所以这是一个整个模型的提升，所以在这个当中会有更多的revenue，我们会去记录。所以这是一个在收入端的模型提升导致的收入的增长。
Speaker 11
Thank you. This is Toby. I'll take the first question and hand over to Daniel on the second question. Yes, indeed, in this quarter, Cainiao revenue increased by some 36% year-over-year. In my script I did go into the reasons, the domestic side, the consumer logistics services. Secondly on the cross-border side as well. I think the biggest contributor was the local consumer logistics side where we achieved a very good growth and improvement, largely thanks to an enhanced service model.
Going from more of a 3PL model to a 4PL model, we're now not just passing on services to customers, but rather we are booking and purchasing services from different providers and then providing those services on to consumers, meaning that we're taking on more responsibility for the service, enabling us to provide overall better service. That in turn is reflected in more revenue that can be recognized for Alibaba and an improvement in our revenue for Cainiao.
Toby Xu (CFO)
对，所以对这样一个服务，一方面是我们提升了这个对customer的服务，另外一方面也满足了相关的一些监管的要求，对于这个服务的行业的一些监管的要求。
Speaker 11
With this upgrade in our model, we are better able to provide services to our customers and at the same time also able to satisfy regulatory requirements that have been introduced into this space.
Daniel Zhang (Chairman and CEO)
好，那我讲一下第二个问题。其实这个对于菜鸟来讲，在阿里巴巴，自从菜鸟成立，2013年成立到现在，在阿里巴巴集团下，菜鸟一定是一个阿里巴巴控股的一个独立运作的子公司，这个是非常清晰的。所以它不仅是因为它有外部的客户，它是独立，更重要它也有外部的股东。现在阿里巴巴是占这个，我们在年报里面都有披露，我们是占菜鸟差不多67%的股份，66、67的股份。所以我们的团队，这个围绕着菜鸟，这么多年来是围绕着这个，无论在这个跟消费者接触点的末端，这个包括城市、乡村，这个社区的驿站，校园的驿站，乡村的驿站，到这个我们在整个物流供应链，从国内到国际，我们都在积极地探索，积极地这个进展，所以也是希望能够菜鸟能够更好地独立地成长。我们相信菜鸟的更好的成长一定是能够反哺到阿里巴巴集团的其他的这个数字商业的业务，无论是国内的商业，还是国际的商业，无论是零售商业还是这个B2B的商业，我想我们这个是阿里巴巴集团不同的业务之间的一个synergy，但是菜鸟肯定是独立面对市场，独立更好地独立的发展来服务到市场的客户。谢谢。
Speaker 11
Thank you. This is Daniel regarding the second question. You know, ever since Cainiao was established back in 2013, it has been independently operated within the Alibaba family, but providing external services and more importantly with external shareholders as well. Today, the Alibaba Group owns some 67% of Cainiao, and there are other investors as well. Over the years, Cainiao has invested in robustly building up its last mile capabilities, Cainiao Post delivery stations on campuses, in villages, all around the country, and also in developing very robust supply chain capabilities with domestic logistics and cross-border as well.
As far as Alibaba is concerned, of course, we look forward to seeing Cainiao continue to achieve very robust development, building those capabilities, and for those capabilities in turn to feed back into and better drive Alibaba's growth as well in terms of our domestic commerce business, our international commerce business, be it 2C, be it 2B as well. This is a really important kind of synergy that we see across the businesses. Certainly Cainiao will continue to be independently operating in the market and achieving success more broadly in the market.
Robert Lin (Head of Investor Relations)
Okay. Thank you everyone for participating in today's earnings call. Today's call will have a transcript available later on our corporate website. Please feel free to reach out to me and the I.R. team for any follow-ups. We'll see you next quarter. Thank you.
Operator (participant)
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.