Author | Liu Baodan

Editor | Zhou Zhiyu

In the past, Intime was one of Alibaba's biggest bets on the New Retail strategy. Seven years ago, Alibaba spent 17.7 billion to acquire it at a very high premium.

However, as Alibaba focused on its core business, it reluctantly let go of Intime, the most representative New Retail project.

On December 17, Alibaba announced through a notice that the company, along with another minority Shareholder, agreed to sell 100% of Intime's equity to a purchasing consortium comprised of members from Youngor Group and the Intime management team. Alibaba currently holds about 99% of Intime's equity.

In this transaction, Alibaba's total proceeds from selling Intime amounted to approximately 7.4 billion yuan, and it will record a loss of about 9.3 billion yuan from the sale of Intime.

The nearly ten billion yuan loss indicates Alibaba's determination to divest non-core Assets and focus on its core business. In addition to Intime, there have been rumors of sales regarding SUNART RETAIL and Hema, indicating that Alibaba is withdrawing from New Retail. Furthermore, Alibaba is also selling shares in Bilibili, Hello Group, and Xpeng Motors.

This transformation signifies the end of high-growth phases for China's Internet Plus-Related Industry, gradually moving into a stock market, with the once thriving era of expansion for Internet Plus-Related giants quietly coming to a close amid numerous sell-offs.

For Alibaba, it is essential to focus on the incoming AI era, which will be an unprecedented brutal battle.

Divestiture.

One is the largest e-commerce platform in China, and the other is a high-end department store brand in China; such a strong partnership has now come to the day of separation.

The buyer consortium taking over Intime consists of members from Youngor Group and Intime's management team; Youngor is a leading enterprise in the national textile and Apparel Industry, with a current strategic direction to become a global fashion group.

According to insiders from Wall Street's view, this investment is led by Youngor Group, with participation from Intime's management; the collaboration aims to 'strengthen and supplement the supply chain' and develop Intime together. In other words, Intime will continue to be managed by the company's management.

The financial backer behind Intime has shifted from Alibaba to Youngor, which is both an active choice by Alibaba and a new plan by Youngor for the future.

As a market leader in the domestic market, Youngor Group achieved sales revenue of 191.6 billion yuan in 2023, ranking 36th among China's top 500 private enterprises. Currently, the company's fashion business is implementing a large store strategy in key cities nationwide and is creating a New Retail system through the integration of online and offline.

From this perspective, there is a strong business synergy between Youngor Group and Silver. Silver Department Store has opened more than 60 shopping malls nationwide, which can help Youngor Group to quickly open stores and also accelerate its digital transformation.

For Alibaba, letting go of Silver while facing huge losses is not an easy decision. Prior to this, Alibaba spent 10 years conducting a New Retail experiment.

Jack Ma and Silver Group founder Shen Guojun are both from Zhejiang, and it is said that a conversation on an airplane led to the birth of Cainiao, with Shen Guojun being one of the earliest investors in Cainiao. This foundation also laid the groundwork for future cooperation between Alibaba and Silver.

In 2014, based on the determination that online and offline retail would converge, Alibaba invested in Silver, holding more than 25% of shares; in 2015, with Zhang Yong's push, Alibaba increased its stake to 32%, becoming Silver's largest single shareholder; in 2017, Alibaba privatized Silver for 17.7 billion yuan, completely bringing Silver under Alibaba.

At the same time, Alibaba also invested in Sanjiang Shopping Club, LIANHUA, SUNART RETAIL, and Suning, particularly with SUNART RETAIL, where Alibaba holds 78% of the shares through continuous capital increases. According to incomplete statistics, Alibaba's total investment in offline retail at that time exceeded 75 billion yuan, and it personally incubated the new retail brand Hema.

Behind such a bold layout, Alibaba believes that the Internet is becoming an infrastructure for social development, and the future trend of the retail industry is the integration of online and offline. New Retail is the new business model.

However, after years of attempts, this New Retail experiment ultimately ended in disappointment, and Silver ended up facing the fate of being divested by Alibaba.

And this is just one aspect of Alibaba's adjustment in layout. In fact, beyond Silver, Alibaba is intensively selling many non-core businesses, including SUNART RETAIL.

In March of this year, Lin Xiaohai resigned as CEO of SUNART RETAIL and was reassigned to another position at Alibaba. Lin Xiaohai took office as the CEO of SUNART RETAIL in May 2021 and was considered a key figure in promoting the integration of SUNART RETAIL and Alibaba. According to insiders, with the change in CEO, communication between the two companies has significantly decreased.

In October, SUNART RETAIL announced a possible voluntary conditional offer, with the controlling shareholder Alibaba discussing the main terms of the possible offer with interested offerors, and Alibaba is also in discussions with several other parties.

During the same period, Alibaba also reduced or liquidated numerous Stocks, including those of Bilibili, Hello Group, and Xiaopeng Autos. Hema has also been rumored to be sold multiple times, and in March of this year, Hou Yi stepped down as CEO of Hema.

In past acquisitions, Alibaba demonstrated big spending, but now, in terms of selling Business, Alibaba is quick to cut through the chaos, daring to sell, sell, sell.

Turning Point.

As an Internet Plus-Related giant, Alibaba has been somewhat preoccupied in recent years, as the growth of Internet users peaked and consumer spending downgraded, catching Alibaba off guard.

With the rise of new forces like PDD Holdings, Douyin, and Kuaishou, Alibaba's market share has significantly declined to below 50%, and Alibaba, once the leader in the e-commerce industry, has begun to realize that the market has changed.

As a result, Alibaba started a series of counteractions. In March of last year, Alibaba initiated the largest structural split in its history, aimed at allowing its various businesses to independently face the market and increase competitiveness. In September of the same year, Cai Chongxin took over as Chairman of Alibaba Group's Board of Directors, while Wu Yongming became the Group's CEO, completing the second institutional handover of company management positions.

This has also brought a new strategic direction. In November 2023, Wu Yongming revealed Alibaba's new strategic blueprint for the first time. The important priorities for Alibaba over the next decade will be in three areas: technology-driven Internet platform business, AI-driven technology business, and a Global business network.

Alibaba proposed that for core businesses, it will maintain long-term focus and continue to invest heavily in resources and R&D. For non-core businesses, it will realize the value of these assets through achieving profitability quickly or using various other capitalization methods.

Clearly, Intime, SUNART RETAIL, and others are not in Alibaba Group's core strategic direction. In February this year, Cai Chongxin revealed that by the first nine months of fiscal year 2024, Alibaba had completed the sale of non-core assets worth 1.7 billion USD. "There are still some traditional physical retail businesses on our balance sheet, which are not our core focus, so it's very reasonable to exit as well."

As a result, Alibaba has begun to divest its previously acquired diversified assets. The sale of Intime sent a signal that the Internet industry is shifting from diversified expansion to focused consolidation; that rapid growth phase of the Internet is ultimately in the past.

For Alibaba, the most important challenge currently is breaking through e-commerce competition and international layout. At the same time, with the advent of the AI era accelerating, Alibaba Cloud must seize this historic opportunity.

Currently, competition in the e-commerce market has expanded from domestic to overseas, and Alibaba is seeking better response strategies. Recently, Alibaba fully integrated e-commerce businesses such as Taobao Tmall Group and International Digital Commerce Group, establishing an e-commerce business group aimed at achieving greater growth through synergistic effects.

In terms of Alibaba Cloud, AI large model technology is still accelerating iteration, with AI Ventures represented by Open AI and Zhipu already starting to accelerate commercialization based on the foundational model, while Alibaba Cloud, as the AI infrastructure, still needs to continuously prove its commercial potential in AI.

Unlike the past decade, New Retail is Alibaba's strategic initiative to expand the incremental space for e-commerce. Now Alibaba has placed e-commerce under a global vision and included AI in the company's core path, which signifies a new strategic upgrade.

An old era has passed, and for Alibaba to become a successful company that lasts for 102 years, it needs to integrate into market changes with a mentality of starting from zero. This is a brand new challenge, and Alibaba must give its all.