Why did Daniel Zhang set Alibaba’s 2020 GMV at USD 927 billion

Chinese e-commerce giant Alibaba’s gross merchandise volume (GMV) for fiscal year 2016, spanning April 1, 2015 to March 31, 2016, was RMB three trillion (USD 463 billion). Alibaba could soon surpass Wal-Mart Stores, Inc. to become the world’s largest retail platform.

Alibaba’s CEO Daniel Zhang made a speech about their successful performance last week.

Zhang has held top management positions across the organization, most recently serving as Chief Operating Officer (COO) at Alibaba for the past eight years. He oversaw the operations of all Alibaba Group businesses in China and internationally. He led the company’s ongoing transition to serve mobile users and built China Smart Logistics, a comprehensive global logistics network.

AllChinaTech picked some of the big takeaways from Zhang’s speech last week that demonstrate Alibaba’s plans for the future as below.

Next big goal

Zhang said Alibaba would make efforts to reach an annual GMV of RMB six trillion by 2020. Alibaba wants to build a new business model rather than copy Walmart.

The company will invest heavily in e-commerce, finance, logistics and cloud computing to make the foundation of its business empire solid, and plans to leverage the Internet of Things to further its development.

Alibaba plans to be a business platform serving two billion consumers and tens of millions of enterprises in China and abroad in five to ten years. It aims to push China to the forefront of the world economy by connecting the Internet with businesses.

Top challenges

Zhang said the team at Alibaba needs to learn from practice, not from books. To run a company well, directors and staff have to deeply understand the laws of the economy.  

Alibaba aims to inspire their teams rather than force them to work for the company. It aims to find the right fit for every employee so as to realize the efficient allocation of talent.

With the closer combination of the digital economy and the real economy, Alibaba needs to make an effort to gradually understand the current status, regular patterns and pain points of the latter.    

New growth engine

Alibaba plans to tap into the spending power of the large Chinese rural population. The company has made every effort to bring its e-commerce platforms to China’s villages, covering 12,000 villages across the country to date. Alibaba will also further scale up its business via its online networks. It aims to link a large population of farmers with the world. Farmers can sell their products across the country while also bringing commodities from developed countries into their rural regions.

Further integration of commerce and the Internet will bring more opportunities and momentum for the economy.

The consumption habits of younger generations will change one day. If rural residents have the opportunity to enjoy the pleasure of surfing the Internet, more demand will follow.

(Top photo from Chuangke.com)

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