Gross merchandise volume is not Alibaba’s top business metric, says senior executive

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Alibaba Group’s campus in Hangzhou, China. The e-commerce giant will now report GMV annually instead of quarterly. Photo: Reuters

Published: 9:22pm, 14 Jun 2016Updated: 2:53pm, 15 Jun 2016

E-commerce juggernaut Alibaba Group will report on its gross merchandise volume on a yearly basis instead of every quarter, following a US regulatory investigation into the company’s accounting practises last month.

Gross merchandise volume (GMV) is a standard often used by e-commerce companies such as Alibaba to measure sales growth. The metric tallies the value of third-party sellers’ transactions processed on the company’s marketplaces.

At Alibaba’s investor day on Tuesday, founder Jack Ma Yun said the company used GMV to tally sales numbers because it was following in the footsteps of US online marketplace Ebay, which had used it as a metric.

“In our heart, we know this isn’t really the only index,” said Ma at Alibaba’s headquarters in Hangzhou, China.

Maggie Wu, Alibaba’s chief financial officer, said GMV was not the top key performance indicator for the company. Wu added that Alibaba’s e-commerce marketplace Taobao had already removed GMV as a metric to measure performance.

“We don’t manage this business by … monthly or quarterly GMV,” said Wu. However, Alibaba will retain its GMV target of six trillion yuan by 2020 after it hit a milestone of three trillion yuan in its 2016 financial year.