How Alibaba Makes Money: core e-commerce, cloud computing, consumer services

Alibaba Group Holding Ltd. (BABA) is a holding company legally domiciled in the Cayman Islands but which conducts its e-commerce businesses through its Chinese subsidiaries and variable interest entities (VIEs). Its primary business is to offer a digital marketplace where consumers and merchants can connect and buy and sell from each other. But the company has expanded its operations to include cloud computing, digital media and entertainment, and other business offerings. Alibaba operates its business through seven primary segments, led by its giant e-commerce operations.

Chief among its competitors are other established Chinese e-commerce and Internet companies, such as Tencent Holdings Ltd. (0700), as well as global and regional e-commerce companies, such as Inc. (AMZN). Since Alibaba also operates in the cloud-computing business and digital-media and digital-entertainment businesses, it competes with companies specializing in those markets as well.

Key Takeaways

  • Alibaba provides digital marketplaces for merchants and consumers.
  • Alibaba's largest business is its core e-commerce operations.
  • Alibaba aims to be a leader in the development of the infrastructure of commerce.
  • Alibaba announced in early December that deputy CFO Toby Xu would succeed Maggie Wu as the company's new CFO, effective April 1, 2022.

Alibaba's Financials

Alibaba files financial statements with the U.S. Securities and Exchange Commission (SEC) and does so in accordance with generally accepted accounting principles (GAAP). The company follows a reporting schedule where the end of its fiscal year (FY) occurs at the end of March.

The company also reports certain non-GAAP financial measures, such as adjusted earnings before interest, taxes, amortization, and depreciation (EBITDA), and adjusted EBITA, which refers to earnings before interest, taxes, and amortization. Although Alibaba's reporting currency is the Renminbi, the company provides conversions into U.S. dollars, which are used in this story.

Alibaba reported financial results in late February for Q3 of its 2022 fiscal year (FY), the three-month period ended Dec. 31, 2021. Net income attributable to ordinary shareholders fell 74.3% year over year (YOY) to $3.2 billion. Revenue, however, rose 9.7% YOY to $38.1 billion. The company's total costs and expenses rose 36.9% YOY, much faster than revenue grew, thus weighing on net income. Adjusted EBITA, the profit metric Alibaba uses for its individual business segments, was down 26.8% YOY to $7.0 billion.

In its quarterly earnings report the company highlighted the growth in its global annual active consumers, which increased to approximately 1.3 billion. Alibaba also noted that its earnings results were adversely impacted by a goodwill impairment of $3.9 billion related to its digital media and entertainment segment as well as decreases in net gains arising from changes in the fair value of its equity investments.

Alibaba’s Business Segments

Beginning in Q3 FY 2022, Alibaba reorganized its reporting structure. The company increased the number of reportable operating segments from four to seven. Those seven segments are as follows:

  • China Commerce
  • International Commerce
  • Local Consumer Services
  • Cainiao
  • Cloud
  • Digital Media and Entertainment
  • Innovation Initiatives and Others

The company provides segment breakdowns of revenue and adjusted EBITA. The company also reports certain unallocated items, which primarily relate to corporate administrative costs and other miscellaneous items not allocated to its individual segments. These unallocated items were excluded from the percentages in the pie charts above and in the individual business segment sections below.

China Commerce

Alibaba's China commerce segment primarily includes retail businesses, such as Taobao, Tmall, Taobao Deals, Taocaicai, Tmall Supermarket, Tmall Global, Freshippo, Alibaba Health, and Sun Art. The segment also includes its wholesale business

The China commerce segment reported revenue of $27.0 billion in Q3 FY 2022, up 6.8% compared to the year-ago quarter. Adjusted EBITA fell 19.7% YOY to $9.1 billion. The segment accounts for nearly 71% of the company's total revenue and nearly all of its adjusted EBITA.

International Commerce

Alibaba's international commerce segment primarily includes the company's international retail and wholesale businesses, such as Lazada, AliExpress, Trendyol, Daraz, and

Revenue for the international commerce segment grew 18.2% YOY to $2.6 billion in Q3 FY 2022. The segment's adjusted EBITA was -$458 million, an adjusted EBITA loss that more than doubled from the adjusted loss in the year-ago quarter. The segment comprises about 7% of companywide revenue.

Local Consumer Services

Alibaba's local consumer services primarily includes location-based services, such as:, a local services and on-demand delivery platform; Amap, a provider of digital map, navigation, and real-time traffic information; Fliggy, an online travel platform; and Taoxianda, a service for helping retailers open online stores.

The local consumer services segment posted revenue of $1.9 billion in Q3 FY 2022, up 27.3% YOY. Adjusted EBITA was -$783 million, an adjusted EBITA loss that widened by 15.3% compared to the year-ago quarter's adjusted loss. The segment accounts for about 5% of Alibaba's total revenue.


Alibaba's Cainiao segment primarily includes the company's domestic and international one-stop-shop logistics services and supply chain management solutions. It works to address the varying logistic needs of merchants and consumers at scale.

Revenue for the Cainiao segment increased 15.1% YOY to $2.1 billion in Q3 FY 2022. The segment reported adjusted EBITA of -$14 million, more than two and a half times narrower than the adjusted EBITA loss in the year-ago quarter. The segment comprises more than 5% of companywide revenue.


Alibaba's cloud segment is comprised of: Alibaba Cloud, which offers a complete suite of cloud services globally, including database, storage, network virtualization, security, management and application, big data analytics, and other services; and DingTalk, a mobile workspace platform for enterprises.

The cloud segment reported revenue of $3.1 billion in Q3 FY 2022, up 20.4% YOY. It posted $21 million in adjusted EBITA, a turnaround from the adjusted EBITA loss reported in the year-ago quarter. The segment accounts for about 8% of total revenue and a small fraction of total adjusted EBITA.

Digital Media and Entertainment

Alibaba's digital media and entertainment segment includes: Youku, an online long-form video platform that allows users to search, view, and share video content across multiple devices; Alibaba Pictures, an Internet-driven platform covering content production, promotion and distribution, intellectual property, licensing and integrated management, cinema ticketing management and data services for the entertainment industry; and the company's other content platforms and online game business.

Revenue for the digital media and entertainment segment grew 0.4% YOY to $1.3 billion in Q3 FY 2022. It posted adjusted EBITA of -$216 million, a slightly narrower adjusted EBITA loss than in the year-ago quarter. The segment comprises more than 3% of Alibaba's total revenue.

Innovation Initiatives and Others

Alibaba's innovation initiatives and others segment includes: Tmall Genie, which offers a range of IoT-enabled smart home appliances, such as smart speakers, lights, and remote controls; and DAMO Academy, a global research program that seeks to integrate scientific innovations with industrial applications.

The innovation initiatives and others segment reported revenue of $163 million in Q3 FY 2022, up 63.1% YOY. The segment posted adjusted EBITA of -$252 million, an adjusted EBITA loss that widened 54.6% compared to the year-ago quarter. The segment comprises a small fraction of companywide revenue.

Alibaba's Recent Developments

On Dec. 6, 2021, Alibaba announced that Toby Xu, the company's deputy chief financial officer (CFO), will succeed Maggie Wu as the new CFO, effective April 1, 2022. The company said that Wu would continue as a partner in the Alibaba Partnership and also serve as an executive director on the Alibaba board.

How Alibaba Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Alibaba and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Alibaba releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Alibaba discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Alibaba breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Alibaba Diversity and Inclusiveness Reporting

Veteran Status
Sexual Orientation

Board of Directors




General Management