Written by | Ho Furong
Edit | Wu Xianzhi
On the evening of February 23, Beijing time, Alibaba Group released its financial results for the third quarter of fiscal year 2023 ended December 31, 2022. According to the financial report, the quarterly revenue was 247.76 billion yuan, a year-on-year increase of 2%, and the market expected 245.875 billion yuan. The high growth of e-commerce is a thing of the past.
In the winter of 2022, with the epidemic, logistics shutdowns, and endless negativity among merchants and consumers, it seems that Ali or other Internet companies can be forgiven no matter what kind of report card they hand over, and these will be frozen in the past. Regarding the external environment, Ali spent the last dark night before dawn.
But for Alibaba, the real tough thing is how the 23-year-old company will face an increasingly fierce competitive environment, innovate its growth model, and ease the pain of transformation.
Ali's handover is also the anniversary of Dai Shan's appointment as Ali's "new number two", and this old Ali person is leading the company into a new stage.
Core e-commerce is more than resilient to pressure, and the rebound is insufficient
Under the condition of increasing uncertainties, Pinduoduo, as the main force of sinking e-commerce, its low-price attributes appear more resilient; In addition, JD.com's self-operated e-commerce and logistics have also shown stronger performance capabilities in an uncertain environment; The live streaming e-commerce represented by Douyin continues to encroach on Tmall's core advantageous categories of clothing and beauty with an offensive attitude.
In the face of the impact of external competitive factors, Ali e-commerce has previously put on a defensive posture.
According to financial report data, Alibaba's revenue in the third quarter of fiscal 2023 only recorded a slight increase of 2%. Even with the boost of Double 11, Ali's performance pressure is obvious.
The earnings report disclosed that Taobao and Tmall's GMV recorded a mid-single-digit year-on-year decline, mainly due to reduced consumer demand, continued competition, and the impact on supply chain and logistics in December.
In terms of categories, weak demand in apparel categories is a key factor driving down GMV. In addition to the temporary changes in consumer demand during the special period of the epidemic, the long-term impact of Ali's apparel category from the impact of live streaming e-commerce cannot be ignored.
The accelerated growth of health products, pet care and fresh products has hedged the decline in some clothing and consumer electronics categories, which may also be Alibaba's resilience as a full-category e-commerce company.
It is worth noting that the Double 11 promotion has shown a clear downward trend in boosting Ali's performance.
From a month-on-month perspective, the fourth quarter of each year is the best quarter for Alibaba's performance and revenue, which is inseparable from the credit of "Double 11". However, according to the year-on-year, the pulling effect of Double 11 has contracted year by year, and since fiscal 2022, its revenue growth rate in the third fiscal quarter has significantly collapsed, and the year-on-year growth in this quarter is only 2.14%.
The e-commerce promotion has bid farewell to the era of national carnival, and with the daily promotion and the return of consumption to rationality, Ali will no longer announce the transaction volume of Double 11 this time.
In the fourth quarter of last year, the national epidemic liberalization ushered in the peak period of diagnosis, demand weakened, and supply chain and logistics were plagued by external factors, further affecting the delivery of e-commerce. The pressure on Alibaba's overall revenue and Double 11 performance was expected.
However, Hong Xu, Chief Financial Officer of Alibaba Group, said: "Over the past quarter, we continued to improve operational efficiency and optimize costs, resulting in strong profitable growth. Our net cash position remains strong and continues to generate healthy cash flow. ”
According to the financial report, Alibaba's net profit attributable to ordinary shareholders in the quarter was 46.815 billion yuan, a year-on-year increase of 69%; Net cash flow from operating activities was RMB87.37 billion, up 9% year-on-year. Through effective efficiency improvement and cost control, Alibaba's net profit growth in the quarter was better than market expectations.
In an extreme external environment, it may be possible to withstand difficult times by cutting back on profits, but as consumption returns to normal, more tests related to corporate experience will follow.
The slowdown in performance growth, in addition to the impact of external factors, is also a reflection of the mature development of Alibaba's e-commerce. In addition to the pursuit of "volume" growth, today's Ali e-commerce also has a longer-term value pursuit.
In May last year, Dai Shan stressed the need to shift from transactions to consumption, extending the trading behavior of consumers in the past forward and backward. It is necessary to go to the front end of the transaction and do a good job of content; Go to the back end of the transaction and do a good job of service, so as to improve the consumer experience in all aspects.
Alibaba E-commerce is no longer pursuing growth at the data level, but is deepening its services in places that are more nuanced about the ecology of consumers and merchants. And this is also the only way for the e-commerce industry to move towards refined operation.
Deepen the content and promote the revitalization of stock
"Pursuing the number of AAC (annual active consumers) should no longer be our goal." Daniel Zhang said last year. Entering the 23-year-old Ali, it is no longer just pursuing "scale" growth, and Ali has since ceased to disclose the specific data of domestic AAC.
Since FY2023, the main focus indicator of Alibaba's core e-commerce business "Dataobao" has been changed from AAC (Annual Active Buyers) to DAU (Daily Active Users). AAC generally reflects the real number of users of the platform, and the latter represents the stickiness and activity of the platform users.
As of fiscal 2022, Alibaba Group's global annual active consumers (AAC) reached approximately 1.31 billion, with the Chinese market achieving the milestone of more than 1 billion consumers. From the perspective of user scale, Taojie e-commerce has moved towards the whole people.
What it needs to do next is how to capture the needs of these more than 1 billion people. In Dai Shan's words: "E-commerce has entered the era of retention from traffic. "Based on the existing user group, do deep experience and service, so as to increase the unit contribution value of users."
"Content strategy" has become one of the main means to promote the revitalization of stock in Taojie e-commerce, which is also the keyword that Dai Shan has repeatedly mentioned since he took office. Enhance user stickiness and enhance the strategic position of Taobao Live and Taobao Shopping.
In the past quarter, Taobao Live ushered in an unprecedented highlight moment. First of all, Li Jiaqi successfully resumed broadcasting, and then during Double 11, Douyin's head anchors set off a wave of "entering the wind". Star anchors such as Luo Yonghao, Liu Genghong, ViVi Wang Wanfei, and stand-up comedian Li Sheng poured into Taobao.
In addition to the head talents, the industry's top live broadcast agencies are also accelerating their entry into Tao, and Oriental selection and making friends are among them. It is also reported that on the night of the 2022 Double 11 pre-sale, Dai Shan personally appeared in the Yaowang Science and Technology Building in Hangzhou, which is also the first time that Yaowang Technology has participated in the Taobao Live Double 11 promotion activity.
The "defection" of these external top anchors and institutions has added more attention to the live streaming e-commerce industry. At the same time, the advantages of Taobao e-commerce in supply chain, distribution fulfillment, and brand private domain operation have begun to feed back to Taobao Live, attracting more live streaming e-commerce practitioners to join.
According to 2022 Tmall 11.11 data, more than 300 million consumers on Taobao Live have watched live streaming events since the pre-sale period. During the Double 11 sales period, the average number of daily viewers of new anchors increased by 561% year-on-year, with 62 live broadcast rooms with transactions exceeding RMB100 million and 632 live broadcast rooms with transactions of RMB10 million, including influencer anchors and merchant self-broadcasts.
According to official Alibaba data, Taobao has added more than 500,000 new anchors in the past year. According to incomplete statistics, the number of live broadcast organizations that entered Taobao in the first two months of Double 11 exceeded 100. Taobao's latest plan is to train 200,000 new streamers in the future. The introduction of head anchors and the training of new anchors go hand in hand.
At present, Taobao Live can bring new vitality and potential to it, but it also needs to find new variables. In addition to live streaming e-commerce, Taobao shopping is another part of Daishan's content-based strategy.
Taobao has been online for more than two years, and now occupies the first-level entrance at the bottom of Taobao's homepage, which shows its importance. Taobao's short videos, graphics and texts that are biased towards planting grass, as well as merchants' live streaming goods, can be brushed by users in this section.
Conforming to the development of content e-commerce and revitalizing the existing users of the platform is the main reason why shopping has been put at a strategic height.
Previously, Taobao data showed that as of November 2021, there were more than 200 million monthly active users, the peak daily activity exceeded 50 million, and 50% of Taobao Tmall's products have achieved content. Users are shopping to plant grass, and then to Taobao Live or mall pulling weeds, directly realizing a closed loop of transactions within the platform.
As of December 31 last year, the number of consumers who spent more than RMB 10,000 on Taobao and Tmall remained at about 124 million, with a retention rate of 98%. Taojie e-commerce is accelerating the activation of members and existing users of the platform to continuously improve the value of unit users.
Go to the front end of the transaction and do a good job. This quarter, the Taobao content sector has shown its vitality, and will continue to deepen under Dai Shan's guidance.
Backward: Check and fill in the gaps and improve the service
With the development and maturity of the original business, various e-commerce platforms began to align with their competitors and "check and fill gaps" to strengthen the basic business plate. To meet the different needs of full-scenario and multi-level consumers, and continuously improve user services, Alibaba is also constantly making up for its shortcomings.
Whether it is the far-field e-commerce scenario, the shutdown of logistics due to the epidemic, or the lack of Cainiao's door-to-door service, these factors have more or less affected the performance level and consumer loyalty of this Taojie e-commerce.
Improving door-to-door delivery capabilities has been a top priority for Alibaba's e-commerce in the past year.
In July last year, Cainiao CEO Wan Lin said at the 2022 Cainiao Open Week that for customers and consumers, Cainiao will focus on five things this year: home delivery, supply chain of characteristic industries, overseas domestic products, technology going to the countryside and enterprise ESG. Among them, "home delivery in multiple ways" has been listed as one of the most important things for Cainiao this year.
Cainiao already provides door-to-door delivery services for consumers in multiple logistics scenarios. For example, through direct distribution, Cainiao provides door-to-door services for Tmall Supermarket and Tmall Global; In addition, according to user needs or product attributes, such as cold chain, home appliances, etc., there are selective delivery services for consumers.
During 11.11 last year, Cainiao provided more than 120 million home delivery packages. Among them, Cainiao Station and Cainiao Direct Delivery each have more than 10 million pieces of door-to-door delivery in a single day, becoming the two main forces of Cainiao to provide quality services to consumers.
According to the financial report, for the quarter ended December 31, 2022, Cainiao's revenue before offsetting the impact of cross-segment transactions increased by 17% year-on-year to 23.023 billion yuan, of which 72% came from external customers. The increase in revenue was due to the upgrade of the service model since the end of 2021, which improved the customer experience and led to an increase in local consumer logistics service revenue, and international logistics solutions also played a facilitating role.
In addition to serving Alibaba's e-commerce well, Cainiao is also constantly expanding to the outside world.
But I have to admit that door-to-door service is a more arduous and tiring job, and most of the rookie stations in the country are franchised models, and it is difficult to dispatch door-to-door delivery when it is really promoted. Rookie station owners everywhere are reluctant to deliver.
The e-commerce industry is becoming more and more volatile, and "what you see is what you get" logistics services are not only a reflection of e-commerce fulfillment capabilities, but also with the outbreak of instant retail, the completion of capabilities such as instant delivery has also become a new opportunity for e-commerce growth.
Alibaba has said that it will establish a diversified fulfillment network through a number of direct businesses, and can provide timed, same-day and next-day delivery services in China. While meeting the multi-faceted needs of consumers, more direct business with more immediate attributes is also contributing more revenue to the group.
According to the financial report, Alibaba's "direct and other revenue" in the third quarter of fiscal 2023 was 74.421 billion yuan, a year-on-year increase of 10%. This is mainly due to the revenue growth of Hema and Ali Health, and the social and economic value of business models such as intra-city retail, fresh food e-commerce, and online drug shopping has been highlighted.
For Alibaba, there are not only online and offline integrated near-field scenarios such as Freshippo, RT-Mart, and Ele.me, but also a combination of far and near fields such as Tmall, Tmall Supermarket, and Taocai Cai to meet the immediate consumption needs of users.
While the service continues to deepen and the consumer experience gradually improves, Alibaba is becoming heavier.
However, it is undeniable that whether it is benchmarking the content strategy of Jitter Kuai and Xiaohongshu, or increasing investment in logistics and self-operation based on JD.com, Ali e-commerce is more self-consistent in the face of changes in the external environment.
After the pace of innovation of the opponent, it is easy to lose oneself and be led by others.
Series B can be defended, but can it attack? At least in the year Dai Shan took office, we didn't see it.
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