Detailed explanation of Ali's 2022 layoffs: local life is the hardest hit area, and core e-commerce will still expand manpower

Wen | Peng Qian and Dong Jie

Editors| Yang Xuan and Qiao Qian

36Kr learned from a number of people close to Ali that since the end of last year, some of Ali's business groups have continued to reduce personnel, and recently, some business units have received layoff instructions allocated by the group, and the layoffs will be carried out proportionally.

The biggest changes in staff size are in the life services sector, including local life businesses such as Ele.me and Koubei, as well as the Fliggy division. Secondly, Hema and Taocai (community group buying business) also have a certain proportion of personnel optimization. AutoNavi also carried out some personnel optimization after the year, but the proportion was not high.

However, Tao's e-commerce has not been affected, and its operation, research and development and other positions are still being recruited; in addition, Aliyun and Cainiao Logistics are not within the scope of this layoff, but the HC of Alibaba Cloud's main departments has been frozen.

Previously, it was rumored on many social media such as Pulse that the overall layoff ratio of Ali in this round was as high as 30%. But several people close to Ali said the figure was too exaggerated. According to the financial report data, as of June 30, 2021, the total number of Ali employees has exceeded 250,000, and if 30% is laid off, it will be close to 80,000.

"Judging from the challenges Ali faces now inside and outside, it is impossible to take such a big risk to lay off so many people in the short term." A source close to Ali told 36Kr.

Alibaba Organizational Chart

The reason why Ali's layoffs occur at this time node is because its fiscal quarter is calculated from April every year, and usually in February and March, performance appraisal and talent inventory will be concentrated. In fact, since last year, Ali's action of freezing HC has been very obvious. A headhunter close to Ali told 36Kr that in previous years Q2 and Q3 were recruitment peaks, but since Q3 last year, Ali's demand has decreased significantly, Q4 and years later, basically gone, "Some departments said that HC will be said in May and June, such as Hema."

However, there are still cases of overreacting to Ali's layoff news. The overall downturn in the economic environment, financial market turmoil, and the sharp decline in the value of the technology stock market have all exacerbated the market's panic and pessimism about the news of layoffs from large factories.

36Kr asked Ali for verification on the layoffs of various business lines, and as of press time, the other party has no response.

Hardest hit area 1: life services sector

The life service sector has become the hardest hit area for Ali's layoffs, especially Ele.me and Word of Mouth under the local life business.

Since January, Ele.me's round of layoffs has continued to this day, and there is an acceleration trend after the Spring Festival. A number of Ele.me internal employees have confirmed to 36Kr that the proportion of this layoff is between 15-20%, rather than the previously rumored 30%, one of the reasons is that since September last year, the number of people transferring from Alibaba Group's BU to local life is also increasing.

Specific to the allocation of layoffs, front-end business lines such as home-to-store first-line BD, regional markets and operations, and local retail supermarkets are the hardest hit areas, and the proportion of layoffs in functional lines and R&D positions is relatively small.

At present, Ele.me has four major business assets: Ele.me App, instant business flow computing platform, instant logistics network (mainly referring to hummingbird) and instant logistics computing platform, the above layoffs are mainly concentrated in the main platform business of Ele.me, and business flow, logistics computing and hummingbird are less involved.

According to internal employees, hummingbird is also one of the main businesses of Hungry Mo this year. Yu Yongfu, the newly appointed CEO of the local life company, attaches great importance to hummingbird, and in his internal speech, he also mentioned that "the barrier to local life competition in the future lies in real-time logistics, and hummingbird will become an instant delivery platform in the future and strive to become an independent company." ”

A number of public data show that the current market share of Meituan and Ele.me has reached 7:3, and from 2019 onwards, Ele.me no longer takes market share as the only criterion for measuring performance. Some hungry employees told 36Kr that in the past two years, the internal mention is more about "holding the dominant area, doing a good job of defense, and playing steadily."

In addition to the hummingbird distribution network, the above-mentioned employees also said that this year, Ele.me will focus on the main app's new, live and "circle test operation", which refers to selecting some merchants to do refined operation services within the regional scope to help merchants increase orders.

Last year, the "circle test operation" has been regarded as an important assessment indicator by Ele.me internally, and now with the call to "guide the takeaway platform to reduce the rate", this assessment will continue this year.

According to the latest financial report data, the "homecoming" business dominated by Ele.me and the "to the destination" business dominated by AutoNavi reached 12.14 billion yuan in revenue in the fourth quarter, an increase of 27% year-on-year, but in Q2-Q4 of 2021, the operating loss of Ali local life was close to 24 billion yuan, and the loss in a single quarter was close to 8 billion yuan.

Word-of-mouth layoffs predate Hunger. According to the late Latepost report, the current word-of-mouth catering business has shrunk from 40 cities directly operated in the past to 11 cities, focusing on first- and second-tier cities, and the rest of the cities will also be converted from direct operation to service provider model.

With the reduction of business scale, layoffs have also followed, "most of the directly operated cities only retain 1/3 of the staff, except for a few who can transfer to Hungry, nearly half of the employees have been optimized," a former word-of-mouth employee told 36Kr.

According to 36Kr, the business of word-of-mouth may further shrink in the middle of the year, and the possibility of merging the remaining business into other business lines is not ruled out. This can be seen in the previous adjustments. In October last year, "Word of Mouth" was moved from the tab at the bottom of Alipay to the "Nine House Grid" on the home page, and then the "Word of Mouth" icon in the middle of the bottom Tab became "Life".

In addition, Fliggy's layoff optimization also began in January, "the headquarters' technology, operation and user growth departments are also involved", a Fliggy employee told 36Kr, "the main reason is that the epidemic has repeatedly made it difficult for the platform to carry out business, too few merchants, and too high operating costs." ”

Hardest hit area 2: Hema and Taocai

Innovation departments such as TaocaiCai, which were once heavily invested but were limited by the introduction of relevant policies, and Hema Business Unit, which has been slow to make a profit, have also become the hardest hit areas for personnel reduction, and the main purpose of these departments is to save expenses for the group.

According to several Hema employees, the overall proportion of Hema layoffs in this round will reach 20%, of which market operation is the main position for layoffs, and the layoff score will be completed at the end of March. In addition to layoffs, 36Kr also learned that employees above Hema P8 have reduced their salaries by up to 30%.

Several people close to Hema said that hema's layoffs in this round are mainly to complete the KPI of layoffs given by the group. In fact, during the tense period of the epidemic, in order to ensure supply, Hema has also added some shared employees. On the one hand, due to the soaring demand for orders due to the epidemic situation, Hema is seriously understaffed, and the epidemic has led to a large number of offline catering employees idle, which can be converted into shared employees as delivery workers, sorters and packaging processers of Hema.

Several sources close to Hema told 36Kr that the community e-commerce project "Hema Neighborhood", which was once regarded as an important growth point by Hema, also began to optimize personnel at the end of last year and reduce the size of stores, such as the Hema Neighborhood stores in the Pearl River Delta region, which have now been closed. Recently, Hema Neighborhood also announced the addition of new takeaway business. At present, each order charges 3 yuan for freight, and the delivery fee can be waived when it reaches a certain threshold.

Alibaba announced last year that it would implement a "management responsibility system" intended to split the various businesses and operate independently, which means that the businesses that once relied on the group's blood transfusion, including Hema (as well as local life companies, Lazada, and Trendyol), will now be self-financing.

After the implementation of the new system, Hou Yi, CEO of Hema, also said many times that Hema's latest goal is to make a profit. In recent months, the news that Hema and Lazada want to seek financing has been widely reported.

The optimization of personnel in the community group buying business has begun since a few years ago, and the proportion is around 20%. According to people familiar with the matter, "front-line BD, grid warehouse agent side, etc. are the focus of layoffs, and R&D personnel have also been interviewed intensively in the near future", which is the same as the previous layoffs preferred by Meituan.

According to 36Kr, after experiencing many business integrations, the current growth momentum of Taocaicai is good, last Q4 its daily single volume has exceeded 12 million, GMV exceeded 13 billion, approaching prosperity, this year's GMV target is to break through 100 billion yuan. However, due to the high cost of operation and management, the overall loss rate of Taocai vegetables is currently about 15-18%, which can be controlled at about 10% compared with buying more vegetables.

With the establishment of China's digital business sector, Taocai cuisine is accelerating its integration into the Taojia system. According to internal employees, the middle office of Taocai has now merged with Taobao, and it has more role in improving user stickiness and pulling new ones in the Tao system.

Less volatile and still hiring business clusters

Youku Video in the big entertainment section also has a certain percentage of the staff cut this time, including the plan to fire a team responsible for producing children's programs. In this section, Ali Pictures, etc., had a large reduction in personnel last year.

From the perspective of the proportion of layoffs, the overall logic of Ali's round of adjustment is to stabilize the e-commerce market and shrink some of the businesses that have not performed well in realization. In fact, in the overall weak consumer environment and unprecedented competition in the field of e-commerce, Ali's strategic focus in the past two years has returned to imposing core business growth, and Ali has also made many adjustments to its organizational structure.

At the end of 2021, Ali announced a new round of organizational structure adjustments, trying to make a complete change to the e-commerce business that has been stable for many years, Ali CEO Daniel Zhang announced in an internal letter that the company upgraded the "diversified governance" system, and appointed Dai Shan and Jiang Fan to be responsible for the newly established "China Digital Business" and "Overseas Digital Business" two major sectors respectively. Among them, Dai Shan, as the president of the group, will represent Alibaba Group in charge of Taobao (including Taobao, Tmall, Alimama), B2C retail business group (Tmall supermarket and import and export business group), Taocaicai, Taote and 1688 businesses.

At present, Ali is indeed in a difficult period, whether financially or business is in an unstable cycle, facing great environmental and competitive challenges. According to the Q3 financial report of fiscal 2022, Ali's domestic business revenue growth fell to single digits, at 7%. In order to maintain revenue growth and counter the deteriorating macro environment, This year Ali will focus on the development of self-operated and overseas businesses.

36Kr exclusively learned that in addition to the B2C retail business group will set up a brand self-operated flagship store, since the end of last year, Ali has been brewing to incubate new self-operated business, and will further integrate the self-operated business currently scattered in various business units to increase the proportion of the business in the overall revenue. According to the Q3 financial report of fiscal 2022, Alibaba's self-operated (Gaoxin Retail, Hema and Tmall Supermarket) has reached 28% of revenue.