On May 20, Alibaba Group Chairman Joe Tsai and CEO Eddie Wu jointly issued a letter to shareholders. The letter stated that on-demand retail has become a core strategic pillar for the upgrade of the Taobao and Tmall platforms.
"We recognize the strategic importance of on-demand retail in leveraging AI to acquire new users, enhance user engagement, meet diverse consumption needs, and increase transaction volume and commercialization levels," the letter said.
The letter described on-demand retail as an essential path for Alibaba to adhere to its "customer first" principle. Consumer behavior has undergone profound changes, with expectations for 30-minute rapid delivery becoming the norm. To win in competition, the company must stay ahead of user demands and remain agile in a rapidly changing market.
This year, Taobao's "Flash Purchase" initiative has maintained strong momentum. During the earnings call on May 13, it was disclosed that for the January-March period, the overall order volume for Taobao Flash Purchase reached 2.7 times that of the same period last year. Key non-food retail categories saw growth of three times year-over-year. The company expressed confidence in achieving positive unit economics (UE) before the end of the new fiscal year.
Taobao Flash Purchase, Tmall Supermarket, and Freshippo (Hema) together form Alibaba's on-demand retail landscape. The annual report released yesterday also disclosed that for the 2026 fiscal year, Freshippo's total GMV reached 107 billion yuan, surpassing the 100-billion-yuan milestone. Over 60% of this contribution came from online transactions, marking the second consecutive year of positive full-year adjusted EBITA for the business.
The full text of the letter is as follows.
Dear Investors,
Today, we stand at a pivotal inflection point for Artificial General Intelligence (AGI).
A multitude of AI agents will undertake an increasing share of digital tasks. Each agent is driven by model-generated tokens and is set to become a primary interface between humans and the digital world. In the face of such profound industry transformation and strategic opportunity, Alibaba Group is in a critical phase of renewed entrepreneurship, innovation, and future-oriented investment. Here, we wish to share our perspective on the future — including our strategic positioning, competitive advantages, and how we plan to capture the next wave of growth opportunities.
As we enter the era of AI agents, AI models and capabilities are rapidly integrating into mainstream work and commercial scenarios, driving a swift increase in token consumption across various industries. For comprehensive AI solution providers like Alibaba, the addressable market size has the potential for exponential growth. Against this backdrop, Alibaba's AI business has moved beyond the initial investment phase and officially entered a cycle of commercial returns. Driven by robust AI demand, the Cloud Intelligence Group's external commercial revenue growth accelerated to 40% in the last quarter of this fiscal year, with AI-related revenue accounting for 30%. AI is driving a comprehensive upgrade of Alibaba Cloud's entire business, shifting the growth engine from traditional compute and storage entirely towards models, computing power, and agent services.
At the AI infrastructure layer, our self-developed T-Head AI chips have achieved mass production, providing high-quality computing power support for cloud computing infrastructure and the Model-as-a-Service (MaaS) inference platform. In foundational models, our R&D has significantly accelerated. The Qwen large model family has stably iterated through three versions in the past three months. The latest generation model, Qwen3.7-Max, is newly designed for agents, achieving continuous breakthroughs in core capabilities like programming and reasoning. To complement the Qwen model family, we are also accelerating the deployment of specialized models. This includes the launch of HappyOyster, an open-world model supporting instant interactive creation, and HappyHorse, a multimodal model focused on cross-modal understanding and generation.
At the application layer, in November 2025, we launched the Qwen App for consumer users — an all-in-one personal AI assistant integrating life, work, and study. The Qwen App is deeply integrated with various applications within our ecosystem, including Taobao, Tmall, Taobao Flash Purchase, Fliggy, Damai, Amap, and Alipay, giving it unique advantages in daily life, services, productivity, and entertainment. These broader integrations expand user reach, enhance user interaction between the Alibaba ecosystem and external services, and solidify our leading position in applied AI. We also released Wukong, an enterprise-grade AI-native work platform for business users. It utilizes AI agents to handle complex workflows and accesses skill modules built upon the Alibaba ecosystem. Wukong and the Qwen App together form our dual-pronged AI application strategy targeting both enterprise and consumer segments.
With full-stack capabilities across the AI value chain, Alibaba holds a strategically advantageous position in the new AI era. Leveraging our accumulated talent, technology, and resources, we are confident in seizing the opportunities of this era and striving to make "AI + Cloud" another growth driver for Alibaba. To realize this vision, we are increasing investment in our full-stack AI capabilities: we will continue to ramp up investment in AI infrastructure and self-developed chips; at the model and application levels, we will invest in building more powerful foundational model capabilities, attract more applications to integrate, and simultaneously develop stronger MaaS products to more efficiently connect models with applications. We see immense value and development opportunities within the market.
In the consumer domain, on-demand retail has become a core strategic pillar for the upgrade of the Taobao and Tmall platforms. China has over 1.1 billion internet users and the world's largest online retail market. Our e-commerce business is rooted in this vibrant, vast market. Taobao and Tmall will remain focused on user growth and experience enhancement as always. We recognize the strategic significance of on-demand retail in utilizing AI to drive new user acquisition, strengthen user stickiness, satisfy diverse consumption demands, and boost transaction volume and commercialization levels. On-demand retail is the essential path for us to follow the "customer first" principle because consumer behavior has undergone profound changes, and the expectation for 30-minute rapid delivery has become the norm. We must stay ahead of user needs and remain agile in a fast-changing market to win in competition.
Growth remains the constant theme for Alibaba. We will deepen technological innovation, deeply integrate cutting-edge technology into our core businesses. If we can create value for our customers, we will inevitably create value for our shareholders. We believe that to gain an edge in intense competition, Alibaba must maintain a "growth mindset" — embracing change, building solid foundations, and winning the future with a long-term perspective. This is Alibaba.
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