Source: LatePost.

In 2019, as Alibaba's new competitor was about to break through a trillion GMV, an entrepreneur commented that the next few years of e-commerce would depend on whether Jiang Fan could outsmart another clever person. Five years later, the most important battle in China's e-commerce industry has once again fallen to Jiang Fan.

On the evening of November 21, Alibaba Group CEO Wu Yongming announced via an email to all staff that Alibaba is establishing an e-commerce business group, integrating domestic and international e-commerce businesses, including Taotian Group, International Digital Business Group, as well as the two strategically innovative businesses 1688 and Xianyu.

Jiang Fan will serve as the CEO of the e-commerce business group and report to Wu Yongming.

In the email, Wu Yongming stated that e-commerce has entered a new era, and Alibaba needs to enhance its global supply chain and consumer service capabilities. AI remains a key focus, and Alibaba aims to seize the current productivity revolution centered around AI.

Messages about Jiang Fan's imminent return to Taotian appear intermittently at Alibaba, and many employees we interviewed were not surprised by this; they are more concerned about how domestic and overseas e-commerce can be integrated in the future. Some are delighted by the upcoming changes, believing it will reduce internal homogeneous competition, while others worry that their original responsibilities will no longer belong to them after the integration.

Next, Taotian Group and Alibaba International Digital Business Group, originally independent subsidiaries, will fall under the newly established e-commerce business group, which is part of Alibaba Group, not an independent company, and does not have its own board of directors.

Alibaba has set the top position for this business group not as a president, but as a "CEO", meaning Jiang Fan will have greater management authority.

The same Taobao and Tmall, but different e-commerce businesses; what has Wu Yongming left after a year of adjustments?

In January 2022, Jiang Fan officially stepped down as the president of Taobao, Tmall, and Alibaba Mama, and was appointed to oversee the overseas digital commerce sector. At that time, Alibaba's domestic e-commerce business had not yet been fully integrated, with Taobao and Tmall having separate teams responsible for the recruitment and operation of each product category.

The majority of Alibaba's revenue comes from Taobao and Tmall, but at that time, the e-commerce business still needed to continuously support other businesses of the Alibaba Group—Cainiao, entertainment, and Ele.me collectively lost 31.6 billion yuan in 2022. It's not just about spending money; Taobao and Tmall also need to utilize more than 0.07 million yuan in transaction volume over the year to support the payment and logistics systems incubated by Alibaba, refusing to use infrastructure built by competitors.

The domestic e-commerce part that Jiang Fan is now in charge of still primarily revolves around Taobao and Tmall, but the teams have gone through multiple rounds of integration, with the focus shifting from the brand-oriented Tmall to the budget-friendly Taobao. Over the past three months, Taobao has successively integrated WeChat payment and JD.com logistics, started running Double 11 advertisements on WeChat, supporting all choices. Other businesses of the Alibaba Group have also begun to be independently responsible for profit and loss. E-commerce-related resources have been redirected back to Taobao and Tmall, with several key executives from various groups being transferred to Taotian Group.

After more than two years, the burdens faced by the head of Alibaba's e-commerce business have significantly decreased, having access to completely equivalent traffic sources and logistics infrastructure as competitors like PDD Holdings.

Most adjustments occurred in the past year, with Wu Yongming serving as the CEO of Alibaba Group since September 10, 2023. On his third day in office, he clarified that Alibaba's two major strategic focuses are "user-first, AI-driven" and clearly defined the complex business of the entire company— Core businesses, domestic and overseas e-commerce, and cloud, require increased investment; other non-core businesses may have the possibility of capitalization.

Wu Yongming also established the staffing principle of 'elevating and utilizing young people', attempting to dig up fresh blood for Alibaba, which is already 25 years old. In the past year, more and more post-95 faces have appeared among the grassroots managers at Taotian Group, and some 90s born individuals have been added at the layer below the president.

Wu Yongming's management style is simple and direct. Internally, at the beginning of 2024, he issued nearly 3,000 words to all employees of Taotian, detailing alibaba's strategic goals, directions, and strategy for the upcoming period.

In the letter, he pointed out the current situation of alibaba e-commerce—significant lag in the last three indicators compared to competitors in a user survey across five core dimensions of an e-commerce platform (richness/good products/good prices/good service/product experience).

He stated that alibaba should stick to the market positioning of 'the all-purpose Taobao,' becoming a better version of itself instead of turning into the shape of its competitors. "Alibaba has previously bet too much on many new directions on Taobao, which has led to insufficient investment and focus on the basic consumer needs of e-commerce."

Externally, Wu Yongming tried to break free from the endless low-price war in the e-commerce industry, magnifying alibaba's advantage in 'bringing operational certainty to merchants.' A typical example is the significant alteration of the traffic rules for merchant stores, clearly making 'experience points' the core basis for traffic distribution, while allowing merchants with a good operational reputation to negotiate refunds with consumers instead of just 'refund only.'

This year's grand interconnected initiative by alibaba, which includes access to WeChat Pay and jd.com logistics, is essentially about subtraction, helping core e-commerce and other businesses decouple and seeking the broadest and most suitable partners.

In alibaba's external narrative this year, the two important promotions, 618 and Double 11, have been victories for Taotian. During 618, alibaba maintained its domestic e-commerce market share, with GMV showing double-digit growth unseen for many years. A market insider informed us that the GMV growth rate for Double 11, after extending the cycle, also reached double digits, and alibaba executives summarized it as 'strong growth' during the earnings call. However, from an employee's perspective, old issues such as high information barriers, business conflicts, and a focus on upper management still exist.

After a year of constant subtraction, Wu Yongming has helped the new e-commerce business group lighten its burden and create new competitive conditions.

Having managed overseas business for nearly three years, Jiang Fan is more like a CEO now.

According to our understanding, the decision to choose Jiang Fan was made after Wu Yongming and alibaba's founder proposed it recently. Although similar rumors have been circulating internally for more than a year, they tend to emerge at every important milestone of alibaba.

Jiang Fan is the most suitable executive at this stage of alibaba to take over the new e-commerce business group. He is the youngest partner at alibaba, having been responsible for expanding alibaba's e-commerce operations both domestically and overseas.

Jiang Fan has worked at Taobao Tmall for over 7 years, 4 of which he directly managed Taobao, leading the mobile transformation of Taobao "All in Wireless", and he headed the recommendation algorithms and content for the Taobao App "Thousand Faces for Thousand People".

After taking over alibaba's international digital business three years ago, he quickly conducted overseas research and organized the business, forming a structure of 2 domestic cross-border businesses (AliExpress, International Station) + 4 overseas local businesses (Lazada, Miravia, Trendyol, Daraz), and launched full-service, semi-service, and self-operated models.

In these three years, the positioning of the two most important overseas businesses of alibaba became clear: AliExpress is responsible for cross-border business, while localized e-commerce operations are handled by Lazada. The commercialization and other departments of both have been integrated to reduce internal competition and work together to fight against competitors; Lazada also initiated the largest organizational adjustment and achieved its first monthly profit in its 12 years of establishment.。

During this period, alibaba's overseas business transformed from an important business segment to an independent international digital business group. Jiang Fan's role evolved from being a large president overseeing multiple areas to becoming the CEO of the sub-group, gaining more discretionary power and needing to consider input-output ratios. From leading Taobao Tmall's business to being responsible for multiple businesses and markets in alibaba's overseas operations, Jiang Fan became more like a CEO.

Currently, competition in overseas e-commerce is fierce, with Temu, SHEIN, and TikTok e-commerce all expanding rapidly. After nearly three years of taking charge, overseas business has become the fastest-growing business within the alibaba group.

According to alibaba's financial report, in the third quarter of this year, alibaba's overseas revenue increased by nearly thirty percent year-on-year, more than double the growth rate of the second-largest local life business. At the same time, alibaba's overseas revenue accounted for 13.4% of the group's total revenue, making it the second largest business group under alibaba, following domestic e-commerce; however, it incurred a loss of 2.9 billion yuan, which is more than seven times that of the same period last year.

This adjustment marks the first time that alibaba has placed its domestic and overseas e-commerce businesses together under one person's management; and Jiang Fan is the only executive within alibaba who has managed both domestic e-commerce and overseas e-commerce businesses.

Previously, alibaba's domestic and overseas e-commerce businesses had already seen some integration.

In mid-March of this year, it was mentioned that employees in both domestic and overseas e-commerce businesses would be allowed to freely move, including switching positions and extending seniority, with Tao Tian employees transferring to international digital commerce without the need to resign first.

By mid-July, Taobao launched the "Global Free Shipping Plan for Fashion," leveraging the "Taobao Overseas" feature in the Taobao app to sell domestic fashion products overseas, initially covering Singapore, south korea, and other regions in asia, mainly targeting the overseas Chinese community. Two months later, this plan expanded from fashion to all categories.

However, as we understand, the business progress of this plan is still in its early stages. Taobao's overseas operations adopt a semi-managed model, where merchants need to be responsible for sending goods to domestic consolidation warehouses, "decorating" overseas stores (product images, main titles, descriptions, etc., translated by Taobao's AI), and consumer pre-sales consultation, while the platform takes care of cross-border logistics, customs clearance, and other aspects.

This is an attempt at deep cooperation between Taobao and alibaba overseas in business, with the former providing product supply and the latter being more familiar with global consumers. The project is handled by Taobao, which is responsible for attracting merchants, while alibaba overseas manages logistics and consumer operations. Popular products from Taobao's overseas sales can also be listed on AliExpress and Lazada.

According to data released by alibaba, leveraging the payment and logistics infrastructure already established by alibaba overseas, plus its own financial subsidies for shipping costs, Taobao expanded its overseas free shipping areas to ten countries and regions during the double 11 period, with new users on Taobao overseas doubling compared to the same period last year, and shipments of free shipping products from Taobao Hong Kong growing by 600%.

However, this is just one direction for alibaba's integration of domestic and overseas e-commerce, and the future possibilities depend on the determination and power of the new CEO.

There can only be one super giant in the e-commerce market.

The competitive environment faced by alibaba's e-commerce in the domestic market is completely different from when Jiang Fan first took office as the president of Tmall and Taobao in 2019.

Five years ago, Alibaba's e-commerce GMV far exceeded the sum of all major competitors, being about 3 times that of jd.com and more than 6 times that of pdd holdings, while Douyin had not yet started doing e-commerce and was a marketing partner of alibaba.

Five years later, alibaba's e-commerce transaction volume remains number one, but is only equivalent to the sum of the second and third positions. Other indicators have been surpassed: the number of trading users is second, not as good as pdd holdings; the number of packages is second, very close to the third place Douyin e-commerce; and DAU (daily active users) is second, about 0.3 billion less than Douyin, leading pdd holdings by 40 million.

Alibaba's revenue, DAU, and GMV growth rates are all slowing down, while competitors are rapidly growing. Although in 2024,Douyin、PDD HoldingsThe GMV has all seen varying degrees of deceleration, but is still faster than alibaba and jd.com.

An industry insider stated that the biggest change in the current e-commerce landscape is that the e-commerce methodology today, is not only more effective for pdd holdings and douyin, "but it seems that market rules have been defined by these two companies."

Alibaba and pdd holdings are the most direct competitors - douyin and wechat, while engaging in e-commerce, one is a content platform and the other focuses on social networking, and they can only allocate a small portion of traffic to e-commerce to maintain the core product experience. As pdd holdings has solved some branding issues through billions in subsidies, and taobao has integrated wechat to resolve some traffic issues, the competitive factors between the two have become increasingly comprehensive.

Retail formats are all about finding a balance among factors like product selection, pricing, and convenience. Good locations are limited offline, and store space is limited, while warehouse supermarkets, urban fresh supermarkets, and convenience stores can each compete differentially, leading to multiple giants.

Online retail platforms do not have such opportunities for differentiation. These two platforms can source products and sell nationwide (or even globally), advertise on wechat, douyin, and weibo, and use the same logistics companies to provide similar delivery speeds. Thus, online retail competition is infinitely close to the essence of retail - where to source products and at what price to sell.

Like what has occurred in other segmented internet industries such as social media, food delivery, and ride-hailing, the situation of e-commerce being divided among several players cannot be sustained. After sufficient competition, the first place will certainly far exceed the second place.

There can only be one super giant in the e-commerce market: alibaba must either outsell pdd holdings or be outsold by pdd holdings, with no other possibilities. What Jiang Fan is currently taking over is the most crucial battle for alibaba.

Editor/rice