Good day, ladies and gentlemen. Thank you for standing by, and welcome to Alibaba Group June Quarter 2015 Results Conference Call. At this time, all participants are in a 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 Jane Penner, Head of Investor Relations of Alibaba Group. Please go ahead.
Good day, everyone, and welcome to Alibaba Group's June Quarter 2015 Earnings Conference Call. With us are Joe Tsai, Executive Vice Chairman, Daniel Zhang, Chief Executive Officer, and Maggie Wu, Chief Financial Officer. Also, as you know, we distribute our earnings release through Alibaba Group's investor relations website located at www.alibabagroup.com. Please refer to our IR website for our earnings releases as well as the supplementary slides that accompany the call. You can also visit our corporate website for the latest company news and updates. Please check it out. This call is also being webcast from the IR section of our corporate website. A replay of the call will be available on our website later today. Now let me cover, quickly cover the safe harbor.
Today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. Factors that could cause actual results to differ materially are set forth in today's press release. To also understand these risks and uncertainties, please refer to our Form F-1 as amended, originally filed with the U.S. Securities and Exchange Commission on 6 May 2014. Any forward-looking statements that we make on this call are based on assumptions as of today. We do not undertake any obligation to update these statements except as required under applicable law.
Please note that certain financial measures that we use on this call, such as non-GAAP EBITDA, including non-GAAP EBITDA margin and non-GAAP net income, are expressed on a non-GAAP basis. We have also adjusted our net cash provided by operating activities to remove purchases of property and equipment and intangible assets, excluding acquisition of land use rights and construction in progress, and adjust for changes in loan receivables relating to microloans of our SME loan business, which we refer to as free cash flow. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I will now turn the call over to Joe Tsai.
Thank you, Jane. Good evening or good morning, depending on where you are. Thank you all for joining. I will kick off with a few brief comments before Daniel and Maggie take you through this quarter. We had a very good quarter with strong growth across our core operating metrics. In the June quarter, the GMV of our China retail marketplaces reached CNY 673 billion, which is $108 billion, representing year-on-year growth of 34%. For an ecosystem of our scale, we continue to see robust growth. To put things in perspective, the absolute dollar amount of additional GMV growth we had in June compared to the same period last year was about $28 billion in just one quarter.
Our growth was driven not only by an increase in the number of consumers coming to our marketplaces to shop, but also the frequency and breadth of their consumption activity across more and more product categories. This reflects our ability to deliver excellent customer experience and demonstrates that our platform is truly a part of everyday life of the Chinese consumer. We also experienced robust growth in mobile and encouraging progress in mobile monetization. In the June quarter this year, we achieved 307 million monthly active users on our mobile commerce apps, which is a net increase of 18 million from March and a 63% year-on-year increase from the same period last year. On monetization, our mobile revenue from China retail marketplaces was nearly CNY 8 billion, representing year-on-year increase of 225%.
Next, I would like to just say a few words about our strategic alliance with Suning, which we announced on Monday. Suning is the leading consumer electronics retail chain in China with more than 1,600 stores in 289 cities. Under our agreement, Alibaba will invest $4.6 billion for 19.9% in Suning, and Suning will establish an online flagship store on Tmall focusing on consumer electronics, home appliances and baby products. The strategic implications of this partnership are threefold. First, Suning's online store on Tmall will offer an extensive selection of high-quality consumer electronics products, providing an unparalleled shopping experience on Tmall. This reinforces Tmall as the premier platform for brands and retailers that wish to establish their online presence and direct engagement with customers.
Second, Suning has an extensive nationwide logistics and after-sales service network with 65 national and re-regional distribution centers, 353 city forwarding centers and over 1,700 last mile delivery stations. This covers almost all of the 2,800 counties and townships in China, as well as over 3,000 after-sales service locations and over 5,000 affiliate servicing partners in 320 cities. This extensive network will tap into the intelligent data network of our logistics affiliate, Cainiao, and offer logistics services to customers on Tmall. With this partnership, we will enhance our consumer experience as customers can expect to receive their orders in as fast as two hours.
Third, because of the large user base on our mobile commerce apps, we are able to leverage this customer base and data technology to bring the right customer to the right store location at the right time. In addition, consumers can have an in-store experience to try products and enjoy after-sale service while ordering and making payment and appointments on a mobile device in a seamless offline to online experience. Our strength in mobile makes Alibaba the best partner to work with off, in terms of offline retailers such as Suning, to develop the omni-channel strategies. Daniel will take you through an update of our major strategic initiatives and business developments.
Thank you, Joe. Hello, everyone. I'd like to review the progress and the strategy for some key areas of our business, including mobile, logistics, cloud computing, international operations, mobile internet services, local services, and consumer experience on our platform. Let's talk about our momentum in mobile. As Joe mentioned, we are having tremendous success in attracting consumers to transact on our mobile apps and also in monetizing that mobile traffic. Mobile GMV in the June quarter was CNY 60 billion, which represented 55% of total GMV. We expect mobile GMV as a percentage of total GMV to keep growing as we continue to improve the user experience on our mobile apps. Mobile revenue represented 51% of our China commerce retail revenue in the June quarter, while the mobile monetization rate climbed to 2.16% in the period.
As buyers move to mobile, advertisers are becoming more and more willing to commit advertising dollars to promote their products on mobile, which in turn improves auction pressure and bidding behavior. We will continue to optimize our P4P services for advertisers and develop more sophisticated tools to help merchants to sell and promote their products on our mobile apps. Let's move on to logistics, which is a growing area of focus for us. Through our logistic affiliate, Cainiao, we have already built a delivery network of unrivaled scale. We are increasing our emphasis on service quality and customer satisfaction. Consumers now enjoy next day delivery services in 41 cities, including Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou, and this will be extended to 50 cities by the end of this year.
We have also launched same-day delivery of groceries, initially starting with Beijing and Shanghai, which has been very successful. Through strategic investments, we are making substantial progress in enhancing customer experience in specific product categories, including white goods through our partner with RRS, the logistics arm of Haier Electronics. Our partnership with Suning will further improve user experience in the consumer electronics and home appliance category. Next, I'd like to discuss our cloud computing business, which had triple-digit growth in the June quarter. We are the number one market leader in cloud computing services in China, and we are beginning to reap the results of years of investment in this business.
The acceleration of our cloud computing business during June quarter was driven by an increase in the number of our paying customers, as well as an increase in their usage of our cloud computing services, including more complex offerings such as content delivery network and data services. In addition to having the most comprehensive service offering in China, our cloud business has a growing and a diversified customer base across public and private industries, including e-commerce, financial services, gaming, and many others. Let's move on to our cross-border business. In recent months, we have made substantial progress in providing international brands access to Chinese consumers shopping on our marketplaces. More and more brands view our Tmall platform as the only e-commerce channel to develop their China business. In June, we also announced partnerships with 12 countries to launch country pavilions.
Which are curated vertical shopping sites designed to promote popular products and authentic specialty products from selected small and medium business from each country. Last week, Michael Evans as President of Alibaba Group, he will lead the team to drive increased levels of cross-border commerce between China and the world. We are thrilled to welcome Michael Evans to join Alibaba. For mobile internet services. Mobile value-added services are critical to user experience and expanding our ecosystem. During the past year, we have successfully integrated the mobile internet business of UCWeb, the number one mobile browser in China, and the most popular third-party mobile browser in India and Indonesia. UCWeb has achieved over 330 million MAUs in June 2015 on a global basis.
With the scale of UCWeb's mobile users, our mobile internet services division is well-positioned to execute growth strategies in mobile search, app distribution, and mobile game communities. I'd like to discuss recent developments in local services. During the June 2015 quarter, we announced that a joint venture operating under the trademark Koubei with our affiliate Ant Financial to execute our strategic plan in local service sectors. Koubei services will initially cover takeout food, restaurants, other entertainment establishments, convenience stores, hospitals, and pharmacies. Users can access these services through either Mobile Taobao app or Alipay wallet. The mobile wallet app operated by our Ant Financial, which enable a closed loop of online to offline interaction between consumers and the physical stores through mobile payment.
We believe that combining our leadership position in mobile commerce with Ant Financial's leadership position in mobile payments will put us in a unique position to capture growth opportunity in this market, which is projected to be over RMB 300 billion in GMV in 2015 according to iResearch. I want to say a few words on our continuing efforts to create an outstanding consumer experience on our platform. Our China retail marketplaces continue to be the destination for consumers to find the broadest selection of quality products.
We continue to enhance the customer experience by offering efficient logistic services and increasing the number of brands selling high-quality products. We are taking steps to improve the quality and health of our marketplaces through proprietary data technology and collaboration with government agencies in China to minimize counterfeits and fictitious transactions. We believe the efficacy of our technology-driven approach, as well as our commitment to gain the trust of consumers and brands, are increasingly driving best access of our platforms. Now I will hand off to Maggie to give you a financial review.
Thank you, Daniel. Hello, everyone. Here are some financial highlights. GMV grew 34% year-over-year to CNY 673 billion. Excluding the effect of the suspended lottery business, GMV would have increased by 36% year-over-year. Revenue grew 28% year-over-year to CNY 20.2 billion. Without the suspension of the lottery sales and the transfer of our SME loan business to Ant Financial, which we already communicated in earlier quarters, our year-on-year revenue growth would have been 36%. Non-GAAP EBITDA margin was 52%, down from 54% in the year ago period, representing increased strategic investments as we've communicated in previous quarters. Non-GAAP net income grew 30% year-over-year to CNY 9.5 billion.
Diluted Non-GAAP EPS, excluding SBC and amortization of intangible assets and certain other items, was $3.68, an increase of 21% compared to $3.05 in the same quarter of 2014. Now let's get into the details. In the June quarter, our blended monetization rate was 2.33% versus 2.52% in the year ago period. The year-on-year decrease was primarily caused by the higher percentage of total GMV contributed by mobile GMV, which has a lower monetization rate. It was also driven by a decrease in PC monetization rate, which was partially offset by the year-on-year increase in mobile monetization rate. Our mobile monetization rate improved significantly to 2.16% from 1.73% in March quarter.
This is due to our great achievement on development of our mobile business and efforts on the improved monetization. PC monetization declined from the year ago quarter. We expect this trend to continue, but given our confidence in our long-term ability to monetize mobile traffic, we do not see it as a significant or lasting headwind to our business. Going forward, we expect improvements in mobile monetization to be driven by our proven ability to deliver value to buyers on mobile devices and increase their engagement on our platform. This will in turn incent advertisers to allocate more of their budgets to mobile on our platform, a trend we're seeing already. Remember, improvements in mobile monetization may not always be linear given the seasonality and other factors that change each quarter.
We continue to believe that in the long term, the mobile monetization rate will approach or even exceed historical PC monetization rates. Year-on-year, our revenue grew 28% to CNY 20.2 billion, primarily driven by increase in new active buyers. The lower year-on-year revenue growth was due to three factors. Number one, the suspension of the online lottery business in late February 2015. A decrease in revenue from the SME loan business that we transferred to Ant Financial. Lower pricing for ads on, a change we made in April to acquire high-quality merchants. If we exclude lottery sales and SME loan business revenue from the year-ago period, total revenue would have increased by 36% year-on-year in June quarter. China commerce retail revenue grew 24% year-on-year in June quarter.
By adjusting for the lottery sales, it would have grown 29% year-on-year. Commission revenue would have grown 42% year-on-year. Cloud computing and internet infrastructure revenue grew 106% year-on-year, reflecting the accelerated growth of our cloud computing business. Other revenue grew 82% year-on-year in June quarter, driven by the consolidation of UCWeb and AutoNavi. Also, please note that in June quarter last year, we had interest income from SME loan business, and we no longer book this revenue pursuant to restructuring of our relationship with Ant Financial completed in February. In the June quarter, our non-GAAP EBITDA margin was 52%, lower than 54% in the year-ago quarter.
The lower margin is consistent with our message, previous quarters, that we will continue to make significant investment into new and existing business to fuel long-term revenue and profit growth. We continue to believe that a non-GAAP EBITDA margin in our core business in the high 50s will remain stable going forward. In fiscal year 2016, we will continue to invest a portion of our free cash flow in new business, and the growth of our new investment spending to grow as a % of revenue. Let's talk about our operating expenses. Non-GAAP cost of revenue was CNY 5.7 billion. Non-GAAP product development expense was CNY 2 billion. Non-GAAP sales and marketing expense was CNY 1.7 billion. Non-GAAP general and administrative expense was CNY 1 billion.
Non-GAAP cost of revenue as a percentage of revenue increased year-over-year, primarily due to an increase in traffic acquisition costs as a result of expansion of our third-party affiliate marketing ecosystem, and an increase in costs associated with our new business initiatives, mainly our mobile operating system and over-the-top services. Non-GAAP product development expense as a percentage of revenue decreased slightly year-over-year as we stopped paying royalty fees to Yahoo after our IPO in mid-September. Excluding that factor, non-GAAP product development expense and the non-GAAP G&A as a percentage of revenue were stable year-over-year.
Sales and marketing expenses as a percentage of revenue increased due to the investment mentioned above. We generated strong free cash flow of RMB 9.5 billion in the June quarter. CapEx in the June quarter were CNY 1.8 billion, an increase from CNY 1.3 billion in the year-ago period and from CNY 1.5 billion in the March quarter. Our cash and cash equivalents position as of June 30, 2015, is very strong at CNY 104 billion. In addition, we have CNY 11 billion in short-term investments. Finally, you will notice that we've added a new slide this quarter that shows the value of our major strategic assets, which is $33 billion. That's end of our prepared remarks. Operator, please open the line for Q&A. Thank you.
Thank you. We will now begin the question- and- answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please keep to no more than two questions at a time to allow more people the opportunity to ask questions. Our first question comes from the line of Alicia Yap from Barclays. Please go ahead.
Joe, Daniel, Maggie, and Jane, thanks for taking my questions. I have a question related to your marketplace. I wanted to get a sense on the balance between the Tmall and the Taobao. It does look like you guys are preparing all these Tmall national mall and then attracting a lot of the cross-border as well as the brands. I wanted to get a sense of is that you will be preparing to give more resources to support these bigger brands on your Tmall platform? If so, will there be any impact to the smaller merchants on your platform? How would you be balancing between the commission revenue versus the search advertising revenue?
This is Daniel. For our marketplace strategy, we have very clear strategy in our marketplaces. Tmall and Taobao have different positions. On Taobao, we want to render our consumers this experience of in-depth selections and to enjoy a fun of discovery. In Taobao, we have 100 billion items in Taobao. Taobao itself serve as a shopping destination. Today in Taobao, what we are doing is try to help more and more manufacturers and small business to create their own brands on Taobao and to start their direct business to build their direct sales to the ultimate customers.
While on Tmall, our strategy is that this is a marketplace, which brands and their authorized distributors do their business direct to the consumer. We'll focus on the quality products and quality services. Taobao and Tmall as a they share the entrance, especially in the shopping search, but they have different position. We think both are very important to Chinese consumers, because they can find different value in the two marketplaces.
I see. Great. The second question is regarding the Juhuasuan. After, you know, adjusting your pricing, and reallocating the resources support, have you seen any meaningful under merchant tractions and the transaction value that you could share with us? What is the overall strategy for Juhuasuan going forward? Thank you.
Alicia, this is Maggie. We definitely see a, you know, a very positive trend after this adjusting of the pricing. The trend of attracting more high quality merchants come to our Juhuasuan platform. Maybe, Daniel, you wanna share about the Juhuasuan strategy.
Yeah. Our Juhuasuan strategy is, it's very clear, and we position Juhuasuan as a promotion as a, as a promotion platform for our merchants to promote their hot selling items. Today, the Juhuasuan, what Juhuasuan doing is work with the merchants to have a detailed plan across the year to decide which day they will do a good promotion for particular storefront or a particular selection of products.
We match this, because of the low price, because of the heavy promotion in Juhuasuan, so Juhuasuan has unique value among the consumers. Every day they, Juhuasuan enjoy the independent huge traffic to the products, which create a lot of value to the merchants to help them to get the people the first try and to promote their products, and further, to bring the traffic back to their storefront, which will be benefit for their day-to-day operation.
Great. Thank you. Our next question comes from the line of Robert Lin of Morgan Stanley. Please go ahead.
Hi. Good evening, management. I have two question here. Obviously, I think we talked about our Tmall differentiation relative to Taobao marketplace, and it's very clear, year to date our progress. Just wanna get a bigger sense on the strategy on the mobile Tmall app, for example. We've talked about, you know, getting a lot of brands, talking about the Netflix-like business for Tmall. Can you put us in context, what are progress of Tmall app and how we intend to differentiate relative to Taobao, going forward? I guess the second question is on mobile monetization rate. We noticed that in the second quarter, we were able to increase our mobile ad load. Just wanna see management comment on how effective that mobile ad load increase was, and, you know, what was the, you know, potential for increase in the, you know, second half this year?
For Tmall app, we launched two new versions in the last quarter. The purpose of the launch and the new version is to try to give the unique services and contents on Tmall app, which could be different from Taobao, for Taobao mobile app, so that people can have a unique value in the Tmall app. We observe good feedback and the users, in terms of user stickiness and frequent frequency of visiting. On the other side, actually, we, because we position Taobao app as a super app, so you can find an entrance in Taobao app, which is the entrance to Tmall. A lot of people also enter into Tmall app via Taobao super app. This also bring Tmall a lot of traffic. We will continue to work on the Tmall app to bring more and more independent traffic to Tmall mobile app.
Yeah, Robert, I'll answer your question on the mobile take rate. We're very happy to see that the strong progress was made on mobile take rate. As buyers move to mobile, advertisers are more and more willing to commit advertising dollars to attract them, which improves the auction dynamics and bidding behavior. We made a lot of efforts in improving the user experience on mobile. Overall, we remain bullish on mobile monetization, this mobile take rate should approach PCs or even higher.
Thank you. Our next question comes from the line of Ming Zhou from 86Research. Please go ahead.
Good evening, management. This is Sean Zhang, asking the question on behalf of Chun Ming Zhao. We have two questions. First one is on monetization as well. We are very encouraged to see mobile monetization jump in the quarter is well within our expectation. Just we have a question on the PC take rate. It seems that PC take rate actually dropped quarter-on-quarter, even with higher contribution from Tmall. Can we get some color on the reason behind that? Second question would be a follow-up on the Tmall, you know, as independent traffic portal, is there anything you can share with how do we approach that, you know, we know both on PC and on mobile, Taobao is a super traffic kind of portal. Do we have any strategy to promote independently Taobao app, sorry, Tmall app or, Tmall, PC? Thank you.
Okay, this is Daniel. For the first question, for PC take rate, first, we do observe a increasing shift of consumers to mobile. We still observe that on PC, we still have huge traffic on PC. If you look at our search PV on the PC, we still, it's still flat compared to previous quarter. The reason why a PC take rate decline is because of less marketing as revenue on the PC side, which is driven by actually, the reason is that we, on the free search, on our search, on our organic search, we add more and more features in the personalization, which greatly improve the CTR in the organic search.
This will have an adverse impact on the P4P. Which finally resulting a decline in the P4P revenue on PC. For the second question, first at Tmall, actually we are in a very unique position. Tmall and Taobao are integrated marketplaces. In the PC times, they are integrated. In the mobile time, they're still integrated because as I said before, visitors can enter into Tmall from Taobao mobile app. They can click the first button in Taobao mobile app, which is Tmall, and enter into Tmall homepage in the mobile site. On top of that, we still continue to promote Tmall apps.
The most important thing is we try to create a unique experience on the Tmall's mobile app, and which include product new launch, which include a lot of services which people cannot find on the mobile Taobao app. We think the unique experience is the key to attract people to visit Tmall mobile app independently. We are happy to promote Taobao and Tmall mobile app to position these two app to meet the different demands of consumers. Thanks.
Thank you. Our next question comes from the line of Eric Sheridan from UBS. Please go ahead.
Thank you for taking the question. My question is around the macro environment in China. Was curious as the quarter developed, the June quarter developed, what you might have seen in terms of end demand and consumption patterns in China, whether that impacted the business and caused any headwinds versus some of the secular tailwinds you're seeing as e-commerce penetration grows, and what that might mean for the rest of the year. Thank you so much.
We closely monitor the Chinese economy and consumer behaviors. We, as we always said, we manage our business and we execute our growth strategy for the long term. The short-term movement won't affect our strategy, affect our long-term strategy. If you look at our number, we reported this quarter, we still enjoy very strong growth. If you look at our active buyers, actually, averagely, these active buyers make purchases more than 50x a year on our platforms, which illustrate the strength of our ecosystem.
Actually, people will buy a large, wide of product assortment on our platform for their daily lives. They are not only coming here for shopping with a very specific shopping purpose. More often, they just come here to enjoy lifestyle. On the microeconomy, we will continue to closely monitor the change of microeconomy and consumer behaviors, but we are confident to grow our business in the long term.
Thank you.
Thank you. Our next question is from the line of Carlos Kirjner-Neto from Bernstein. Please go ahead.
Hi. Thank you. I have two questions. The first one I wanted to ask you to compare a specific driver of mobile versus PC GMV. Can you help us understand if the portion of GMV driven by ads on your site versus organically by, for sellers is fundamentally different for PC versus mobile? In other words, are people going to to seller items, to organic links, more on PC or more on mobile, or similarly for advertising links? Second, following up to Daniel Zhang's comments on the impact of personalization on PC monetization, why can't personalization also benefit the CTR of paid links? In other words, shouldn't your paid search team be catching up with the organic one and stop this erosion of PC monetization? Thank you.
Yeah. In terms of efforts on the GMV growth for PC and mobile, as you know, we're more focused on the people, the buyer consumers. Rather than, you know, just treating this PC mobile as two separate marketplace. People's behavior is that they could use both, right? They search and, you know, click on mobile. They might get transaction done on PC or vice versa. All of our efforts attracting the consumers is mainly related with the improvement of user experience.
For the second question, actually, we do add a lot of personalized features in our ads business, but we still primarily focus on actually the P4P business primarily based on the bidding of, the bidding price, the cost per bidding price. We do observe that the personalization will narrow down the product pool of who participate in bidding and will affect the bidding behavior. The P4P business will still primarily driven by bidding. We will Actually, we are adding more personalized features to make sure people get the relevant recommendation. Thanks.
Thank you. Our next question comes from the line of Alan Hellawell from Deutsche Bank. Please go ahead.
Thank you. I was hoping to go back first to the new relationship with Suning. I assume that 3C is maybe our second-largest category behind apparel. Assuming we extend Suning as wide a berth as it might seek on our platform, and with Suning at least initially offering probably materially better logistics capabilities compared to its other neighbors on Tmall, how do we think about the many 3C merchants that are already on our marketplace and how might this impact them?
It's a good question. Actually, Suning, everybody understands Suning is has very strong strengths in consumer electronics, home appliance. Suning participant in our top our marketplaces open a Tmall, open their Tmall operation will bring us a large selection of the products and premium services. We think this is good for the consumers, and this will bring a lot of additional traffic demand to our marketplaces. This will ultimately share by the merchants who already are our platform.
Also, we do believe that with a strong supply chain capability, we can work well with Suning to leverage the supply chain expertise and get better supply on our platform, which will be ultimate benefit to our consumers. We are confident that Suning's participation will bring us the net ad, the net ad on the business and additional traffic because of the premium product and service they brought to us.
Thank you. My second question is regarding the expiration of the lockup on 19th September . SoftBank seems to have reiterated recently its intentions to remain a long-term shareholder. We meanwhile generally have a grip on what scenarios might play out vis-a-vis Yahoo. I was wondering whether there might be any other color you can share regarding the intentions of other shareholders who unlock next month. Thank you.
This is Joe Tsai. There are four shareholders that unlock next month. There's SoftBank, there's Yahoo, which you talked about. That leaves Jack Ma and myself, in terms of getting unlocked next month. Half of Jack. On this one, he's authorized me to talk on his behalf. Jack and I have zero intention to sell, other than a small amount that are in our charitable trusts, that if we sell, we would be making charitable donations.
Thank you. Our next question comes from the line of Dick Wei from Credit Suisse. Please go ahead.
Hi, management. Thank you for taking my questions. My first questions is on logistics. wonder, first of all, on the warehouse side, I wonder what's the adoptions by our marketplace merchants on our warehouses? And also, how are the merchants adopted in, for example, next day or same day delivery, given that it's probably high cost for them? Thanks.
Hi, Dick. This is Daniel. For our, for the, for our logistic services, actually, we developed the logistic solutions based on the nature of the products and the categories. We closely work with our partners to deliver, to render the logistic services to the relevant merchants in their category. For example, for white goods, today, what we do is we work with the Haier Electronics and for, on Tmall, all of the merchants are selling white goods products. They are enjoying this services, and they ship their products first to the warehouse operated by RRS.
We together will handle the fulfillment and last mile delivery. We also deliver other the services in other categories such as groceries, such as fresh produce goods and cross borders. We don't want to give them people a unified solution because actually, it's very difficult to develop a unified solution because the product, physical product is totally different. We have to develop the solution by categories and by business. Thanks.
Yeah, Dick, I just add a little bit on this logistics. We see logistics as a, as a must to the e-commerce business. It's a utility. It is a commodity. We have been handling, as you know, approximately 30 million packages per day, which is 10x of our competitors. In our press release, we also talked about our efforts on improving the logistics service. Now the consumers on our platform can enjoy next day delivery services in 40, more than 40 major cities, and that number gonna be extended to 50 cities by the end of this year.
We also launched the same day delivery service and which has been very successful. We have seen grocery sales in Beijing increasing 740% year-on-year, while 90% of the orders came from mobile devices. In addition, through our partnership with Suning, as just recently announced, the consumer in over 150 cities will be able to enjoy two hour delivery services for consumer electronics and home appliances.
Great. Thanks. My next question is on the mobile take rate dynamics. Obviously we've seen a pretty good pick up. I wonder if the current take rate on mobile, if you compare to PC, do we see more upside in terms of maybe the commission side or on the advertising side? Then maybe down the road when the mobile take rates higher than PC, which is the area that we think that would surpass PC. Is that the advertising or the commission? Just wanted to see how maybe management thinks about the dynamics going forward. Thanks.
I think, Dick, I think, first, our mobile take rate will continue to grow and I won't surprise that it will surpass PC. Second, I think this growth will driven by both commission revenue, mobile commission revenue, because more and more GMV is generated from mobile. Second, also driven by the increase, increasing, the growth of the online marketing services on mobile, because more and more advertisers, they observe this consumer shift to mobile. Now they are willing to spend more money, spend more marketing dollar on the mobile side.
Thank you. Our next question comes from the line of Douglas Anmuth from J.P. Morgan. Please go ahead.
Great. Thanks for taking the question. Two things I wanted to ask. First, if you could just comment on the $1 billion in incremental investment in AliYun, the cloud business, over what timeframe that might take place, also how you think about the international opportunity there. Second, with the appointment of Michael Evans recently to President and heading up globalization, do you expect any kind of change in the global strategy there, or still just very focused from a cross-border perspective?
The first question, our, we announced that we will invest CNY 1 billion in Aliyun, because Aliyun is one of our core strategies in the coming years. Today, we are really the number one market leader in cloud computing services in China. We observe a substantial potential in the future. We are now serving a growing number of public and private company to render them the storage computing, computation and the data management services. Our investment will help us to create a ecosystem in Aliyun and to, including upgrading our technologies and bring more talented people to us and also to help our partners in this ecosystem to grow.
Which will ultimately help us to build up a comprehensive ecosystem around Aliyun. We together with our partners, could deliver the high-quality services to our mutual clients.
Thank you. Our next question comes from the line of Eddie Leung from Merrill Lynch. Please go ahead.
Good morning and good evening. Thank you for taking my questions. Two questions about your mobile business. The first one is about user behavior versus PC. Could you give us an update on, for example, the conversion rate, the basket size and order frequency on mobile versus PC? Any interesting trends you observed it? And then secondly, just a follow-up question on your mobile take rate expectations. You mentioned that you would expect the take rate to go up and close the gap with PC, coming more, coming both from advertising and commissions. Just wondering about your commissions, because I think the commission rates could be the same at the moment. Do you plan to have a different commission rate on mobile versus PC?
If not, how comes the mobile take rate on commissions with the difference than PC? Thanks.
For the first question, as I said before, we manage our business as a whole, and we don't separate the PC behavior and the mobile behavior because a lot of people do the shopping across the screens. Sometimes they search and they navigate on PC and then put something on the shopping cart, then they buy on the mobile. Sometimes people buy bookmark on a mobile, and they buy on a PC. It's a cross-screen behavior. If we compare, if we analyze further the behavior of the consumers, we still can see some change.
First, on a mobile side, people tend to visit us more frequently, but for every visit they spend less time than PC, but they come to us more frequently. Second, if we analyze the GMV by category on a mobile versus on PC, we will see people on a mobile side, actually, the average basket value on a mobile side still are smaller than on PC. The people is especially for those big-ticket items, people still tend to buy on PC. For the second question of the take rate, I would say first, the commission is same on PC and on mobile.
The take rate could be different because why take rate, mobile take rate, will increase is because more and more revenue, more and more GMV will be generated on the mobile side, which will contribute a lot of mobile commission revenue and will increase in the mobile take rate. Thanks. Question from Doug, which is cross-border strategy. I just wanna add a few more words on the cross-border strategy. Actually, we have very clear international strategy, and this is a core strategy for the coming decades. Today, we start from cross-border, and we want to still put one leg in China and leverage what we have today in China market. Today, when we talk about cross-border, the first thing is import.
We wanna help the overseas suppliers to sell their products, which not exist in China right now, to the Chinese consumers through our platform. Second, actually today, that's why we are heavily promote our Tmall Global platform. Secondly, we are trying to help the Chinese SME to export their products and do the direct sales to the consumers in other countries. Today, actually, we the vehicle for the export business is AliExpress, and we will continue to promote AliExpress in other countries. Ultimately, we want to build up a global trading platform and to enable the buyer and sellers from different countries to trade in this global platform. I think this is a long-term vision of our international strategy.
Thank you. Our next question comes from the line of Mark Mahaney from RBC. Please go ahead.
Thanks. I wanted to ask about the logistics and trying to put this investment in context. When you think about expanding your nationwide logistics network, do you think you've already reached enough scale, or do you think this is gonna be an ongoing 5-10-year investment with more, more of these types of deals going forward to either direct investments or building out more of your infrastructure directly? Thank you.
Today we have actually, we have built up a unrivaled scale in logistics with our logistics partners. Every day, we handle over 30 million package a day. This is a huge scale. This is done by our collaboration, by our logistics partnership strategy. Today, in On top of scale, today, we put pay more attention to the service quality and the customer satisfaction. That's why we work with our partners in different product categories and in different business to try to deliver to render the, for example, the secondary delivery service in 41 cities, and we wanna roll it out to 50 cities by the end of this year.
We also, for groceries, because people buy groceries online, mainly for the purpose of convenience. That's why we render the same-day delivery, starting from Shanghai and Beijing, for grocery sales. Looking ahead, we will continue to expand our service and try to give people different selections in product services, in logistics services and to improve the consumer experience on the logistics side.
Yeah, Mark, you asked about our further investment in the infrastructure. While we're utilizing this, these assets infrastructure from our partners, we're gonna also, at the same time, through Cainiao, our logistics vehicle to invest in certain infrastructure area. That's mainly to for the purpose of, you know, implement our data strategy. Eventually, we're gonna have these hubs link up with data and to further improve the utilization and efficiency for the whole logistics system.
Right. Thank you. Our next and last question comes from the line of Piyush Mubayi from Goldman Sachs. Please go ahead.
Thank you for the opportunity. Could I ask on the mobile take rate, for the advertising side, is the mobile ad inventory at all a bottleneck? That's my first question. Second, could you, I realize there's limited time, talk briefly about the other large GMV opportunities, one of which is prescription pharmaceuticals and the other, the prospects of lottery business coming back? Thank you.
Yeah. Piyush, this is Maggie. In terms of our mobile take rates, as you see that, right now, the slot we have been monetized on the mobile front is still limited. We communicated earlier that the difference between us and social network is that literally speaking, the buyers, consumers come to our site looking for goods, so they come for the ads, you know, as long as the relevancy are there. That's the first priority. We do believe that there are a lot of interests that we could utilize.
However, our first priority is to, you know, keep, you know, the momentum or growth of mobile business because we believe the penetration could be further, you know, grow. We did have a test, a certain slot on our mobile platform. Although the revenue contribution is not that significant, we're gonna keep this kind of testing, and eventually, this is a balance of user experience and monetization. Your second question asked about the lottery impact. When will that come back?
First of all, I want to remind people that the lottery impact actually is particular for this quarter and next quarter since we had this World Cup event last year, which, you know, made the June quarter and September quarter big sales on lottery. When it will come back, there is no timetable. We are gonna just closely watch, you know, how government gonna. There is no reason for that once the government allows that other players come in and we are not there. We just, you know, gonna wait for it to reopen.
One more question about the prescription pharmacies. I would say today on our platform, we sell the OTC drugs, and we will strictly follow the government policy and to do the prescription pharmacists.
That's all the questions we'll have for today. Just wanna thank everyone for joining the call. You can close the call, operator.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.