Alibaba in the process of reflection

A year ago, Ma Yun wrote on Ali's intranet: “Ali will change, Ali will change.” After a year, on April 10, Ma Yun published the article “Leading to Reform and Innovation” on the intranet, affirming and encouraging the changes made by Ali. He said, “Over the past year, Cai Chongxin and Wu Yongming have led Ali in a series of future-oriented changes with admirable courage and wisdom.” “This year, amidst many doubts and various pressures at home and abroad, I saw the birth of a strong and brave Ali team.”

He said, “I believe e-commerce in three years will definitely not be the most popular e-commerce today... the important thing is not who to catch up with today, but rather to think about how tomorrow's e-commerce should improve the consumer experience.”

At the same time, he is also honest. Over the past 25 years, Ali has made countless mistakes. “Facing problems openly is not about denying the past, but about responsibly finding a path for the future.”

Prior to that, in an interview video posted by the Norwegian Sovereign Wealth Fund on April 3, Alibaba's co-founder and chairman of the board of directors, Cai Chongxin reflected on Alibaba's strategy over the past few years: “In the past few years, when we did internal reviews and self-reflection, we knew that Ali was lagging behind because we had forgotten who our real customers were. Our customers are people who use the app to shop, and we're not giving them the best experience.”

What is behind the “collective” reflection is that Alibaba's era of rapid growth has gone further and further. According to the financial report released in February of this year, last year's Q4 Taotian Group's revenue of 129.07 billion yuan accounted for about half of Ali's current revenue, which was 4.5 times the second-largest international commercial revenue, but the year-on-year revenue growth rate was only 2%, ranking the group's lowest.

Regarding Cai Chongxin and Ma Yun's “reflection,” a major seller on Taobao, “Grandpa Diao” mentioned on his WeChat account, “I want to say: throw all the contradictions to Xiaoyaozi. It's not decent; you can stop for a moment. The top priority is: Taobao's 'ecological position' is being squeezed like never before. It's useless to just reflect; breaking the game is the right path.”

Many sellers intuitively feel that the current Taobao is “messy.”

“Now I feel like everything inside of Taotian is a mess. Arguably, at the beginning of every year, every brand has to sign a 'year frame' on Tmall. This is not only a means for Tmall to bind each brand, but the problem is that now it's April, and our sophomore year is constantly changing, so no one can handle our New Year frame. We can't find the temple gate with a pig's head.” Grandpa Diao said.

There are quite a few merchants with similar views. Some merchants said, “All platforms under the Taobao department are messing with policies. It's unstable, and it's inexplicable.”

Now, in the face of Ali's drastic changes, some people are also questioning: “Can Ali hold up with such intense and frequent personnel transfers, plus policy adjustments like a fly?”

User experience overlooked by Taobao

How did Alibaba ignore the user experience in the past few years? We're trying to figure this out.

Judging from the consumer level, Taobao does “focus on merchants and light on consumers.” “Making the world a business that is not difficult to do” has always been an important mission of Alibaba. From the beginning of its establishment until now, it has not changed. This also means that B-side merchants are Alibaba's core service customers. Over the years, many businesses launched by Alibaba, products such as Alibaba Cloud and DingTalk, are also targeting B-side products.

As a result, many consumers' consumer experience is that Taobao maintains merchants more, and returns and refunds are troublesome.

After Cai Chongxin's interview attracted attention, self-media blogger “Mischievous E-commerce” said, “Cai Chongxin finally admits that Ali has ignored the user experience.” He shared an example: I bought a sofa on Taobao two years ago, and the merchant “cut corners” but did not admit it. After filing a complaint with the platform, Taobao customer service directly rejected it.

In the past few years, when Ali has been making a big effort to upgrade consumption, neither consumers nor small to medium sellers have been pleased.

In 2008, Ali's cash flow began to grow exponentially. Tmall, which serves brand merchants and earns advertising fees from brand merchants, was also born in this year. There is no doubt that Ali has achieved rapid growth through service brand merchants, but at the same time, it has also ushered in backphagy.

Under the platform's policies and algorithms at the time, a large number of small to medium sellers did not receive sufficient traffic support, complained, and chose to leave.

At the same time, products recommended by users are getting more and more expensive. Originally for a more affordable promotion, it also affected the consumer experience due to increasingly complex gameplay and rules.

Under the popularity of the alternative economy, the emergence of Pinduoduo has largely filled this gap and taken over many of the original Taobao merchants and users.

Back to Taobao, back to e-commerce

After becoming the CEO of Ali Group, Wu Yongming directly split Ali's huge business system in two. Some businesses were defined as core businesses, and the rest were non-core businesses, maintaining strong resources and R&D investment in core businesses, while achieving value for non-core businesses through quick profit or various other capitalization methods.

Judging from various initiatives, Ali is making every effort to build resources to promote the development of Taotian's core e-commerce.

On March 26, Ali issued an announcement deciding to withdraw Cainiao's listing application and offer to acquire Cainiao's minority shareholders' shares and shares already owned by employees. The amount involved in this acquisition reached 3.75 billion US dollars.

Regarding Ali's decision to withdraw Cainiao's Hong Kong stock IPO application, Cai Chongxin mentioned that in the current environment, the focus should be on promoting synergy between the different businesses within the group. This move best reflects the true value of the company's various businesses.

It can be seen that from the perspective of Ali's stabilizing e-commerce position, the logistics business needs to closely cooperate with the next year's e-commerce battle to focus on services for the group. This is one of the major reasons why Cainiao suspended its listing.

Second, 1688 has fully accelerated its entry into the market.

Currently, 1688 has opened four official stores on Taotian, namely “1688 Selected Store” (Taobao Store), “1688 Official Factory Store” (Tmall Store), “1688 Enterprise Procurement Store” (Tmall Store), and “1688 Industrial Connoisseur's Choice” (Tmall Store). In the future, these 1688 series stores will be integrated into a channel similar to Tmall supermarkets to launch carefully selected products for Taobao users.

Furthermore, Taobao is boosting content e-commerce.

On March 28, Taobao announced that it will add 10 billion dollars in cash and 100 billion in traffic to content e-commerce this year. Taobao sees content e-commerce as a dividend and has set a goal of doubling the number of users over the same period last year.

Tmall announced that the FMCG industry provides commission-free incentives for in-store broadcasts, and merchants at all stages of development can participate; the Tmall apparel industry has invested an additional 1 billion platform resources to incubate high-quality content live streaming rooms, celebrities, etc., to increase the penetration rate of brand content.

In February of this year, Taotian also set up a live streaming e-commerce company to provide fully managed operation services for celebrities, KOLs, etc. interested in joining Taobao.

It's not easy to revive Taotian, but for Ali, this is the only path it can take.

Editor/Jeffrey