Alibaba has started a major counterattack

Author | Liu Baodan

Editor | Zhou Zhiyu

Alibaba has finally begun to reflect on itself.

Recently, Joseph Tsai, co-founder and chairman of the board of directors of Alibaba, stated that in the past few years, Alibaba has fallen behind. The problem with Taotian Group lies in neglecting user experience, and the entire group has reorganized for this reason.

Joseph Tsai's confidence in saying this comes from Alibaba now having a clearer counterattack strategy. On April 2nd, Tmall released a new year's brand management strategy at the TopTalk 2024 Super Brand Private Meeting and signaled support for store broadcasting. Just a week ago, Taobao announced an increase in policy support for content e-commerce.

Since Eddie Wu took over as CEO of Taotian at the end of last year, Alibaba has started focusing on meeting user needs. At the same time, Alibaba Cloud and Cainiao have "returned" to Alibaba to enhance support for e-commerce business.

Alibaba has finally begun to concentrate its efforts on conquering the e-commerce battlefield. However, facing strong competitors such as Pinduoduo, Douyin, and Kuaishou, whether Alibaba can break through remains unknown.

For over twenty years, Alibaba, as the pioneer of Chinese e-commerce, has enjoyed the greatest development dividends. Now, those days are gone, and if Alibaba wants to maintain its past glory, it must continue to face challenges through trial and error.

Playing Cards

A series of actions indicate that Taotian is making efforts in content e-commerce.

At the private meeting, Tmall announced incentives for store broadcasting in the fast-moving consumer goods industry, allowing businesses at various development stages to participate. Tmall's fashion industry will increase investment in platform resources by billions, incubating high-quality content live streams, category influencers, etc., to enhance brand content penetration.

"The most attractive part is the support for store broadcasting." A domestic skincare product shelf e-commerce operations manager who attended the private meeting told Wall Street News that currently, Tmall's commissions for shelves and live broadcasts are the same, and this time the support for live broadcasting is significant.

This is just one aspect of Taobao's efforts in content e-commerce. On March 28th, Taobao announced that this year it will add billions in cash and billions in traffic to content e-commerce. Taobao sees content e-commerce as a dividend and has set a goal to double its user base year-on-year.

Moreover, Taobao has changed its previous style of fighting on multiple fronts and concentrated all resources on the Taobao app. Earlier this year, Taote and 1688 have successively joined Taobao, with the former moving back to Taobao as a whole and the latter bringing millions of original manufacturers to Taobao.

These actions indicate that Taobao is making efforts to attract users. In May last year, Taobao told investors that in the coming years, it will make significant and continuous investments around meeting and creating user needs.

Currently, Taobao's focus on content e-commerce is mainly to address its own traffic anxiety issues, especially in the situation where user growth in the internet industry has peaked. How to attract users to continue placing orders is the core test of whether Taobao can successfully counterattack.

At the same time, to some extent, this also indicates that when facing market competition, Taobao is currently focusing on content e-commerce represented by Douyin. As for the price-focused Pinduoduo, Taotian is playing the Tmall card, indicating that the focus is not solely on low pricesEssentially, this is also a manifestation of Taotian Group's "adherence to consumer stratification and price power strategy". During the third quarter conference call on February 7th, Eddie Wu stated that 2024 will be a year of comprehensive capability improvement for Taotian, as well as a year of significant investment, with the top priority being product supply.

It is important to note that brand merchants contribute the majority of advertising revenue, and Taobao's business model dictates a deep reliance on brand merchants.

Looking at the comprehensive financial reports, Taotian's revenue growth in the past three quarters has been 12%, 4%, and 2% respectively, gradually declining. The main reason is the low growth rate of customer management revenue that supports performance growth, which is only 10%, 3%, 0%, while brand merchants are the core support of advertising revenue.

With resources shifting towards Tmall, Alibaba's performance improvement is expected to accelerate. For Taotian, introducing market competition into its more proficient comprehensive e-commerce field may also be a good strategy.

Whether Tmall can turn the tide for Alibaba will be a major focus of the e-commerce market in 2024.

Focus

After more than a year of business separation, Alibaba's main task is becoming increasingly clear, which is to focus on business around e-commerce.

Within the Alibaba Group, many businesses have synergies with e-commerce, such as Cainiao and Alibaba Cloud.

On March 26th, Alibaba announced its decision to withdraw the listing application for Cainiao and plans to purchase the shares held by minority shareholders (including employees) at $0.62 per share. Just five months ago, Alibaba announced that it would no longer completely spin off its cloud business and would increase its investment in the business.

Alibaba Cloud and Cainiao will be reconnected with e-commerce and become key investment targets for the Alibaba Group, indicating that the core of Alibaba's current focus is business synergy.

During the analyst conference call that evening, Joseph Tsai stated that e-commerce is one of Alibaba's two core businesses, and providing the most competitive consumer experience requires the deep integration of Cainiao and e-commerce.

At this point, Alibaba's overall strategy has taken shape, focusing on businesses with high synergy effects based on Taotian and Alibaba Cloud as core businesses.

With the increasing importance of Alibaba Cloud and Cainiao, Taotian's competitive advantages will also be further demonstrated, with the former empowering e-commerce business from a technological perspective such as AI, and the latter improving consumer shopping experiences.

As for other non-core businesses, Alibaba may decisively divest. Recently, businesses such as Ele.me, Hema, Gaoxin Retail (Darunfa), and Intime have been rumored to be sold, with key figures like Yu Yongfu and Hou Yi already exiting or retiring.

Meanwhile, Alibaba is also accelerating the disposal of non-core assets. Recently, Alibaba has successively reduced its holdings in Bilibili and XPeng Motors. It is reported that in the first 9 months of the 2024 fiscal year, Alibaba completed a total of $1.7 billion in non-core asset divestments.

Over the past year, Alibaba has faced unprecedented challenges, not only briefly being surpassed in market value by Pinduoduo, but also facing a constant stream of negative news, gradually fading the glory of its past as the king of e-commerce.

The greater crisis lies in the fact that Pinduoduo, Douyin, and Kuaishou have not only risen strongly but have also been making frequent moves. For example, Douyin quietly launched the "Douyin Shopping Edition" app recently, emulating traditional e-commerce platforms and making "price power" its e-commerce strategy for 2024, intensifying its low-price competitionAlibaba has spent a year gradually figuring out the future direction, which is to focus on enhancing the competitiveness of e-commerce. Currently, Alibaba is in the process of revitalizing Taotian Group, aiming to regain growth and solidify its market leadership.

The fierce market competition in the past few years has completely awakened Alibaba, and it is stirring up the e-commerce market with a fresh entrepreneurial spirit. With Alibaba going all-in on e-commerce, the e-commerce market is expected to see a new round of reshuffling after over twenty years of development