Ali continued to dismantle

Author | Luo Lixuan

According to 36kr news, Taobao Tmall Business Group ushered in major personnel changes. This is also the first subsidiary of Alibaba Group to carry out personnel adjustments after announcing a large-scale restructuring plan at the end of March and launching the group's "1+6+N".

Alibaba's current president of Taobao Tmall Industry Development and Operation Center Yang Guang (flower name: Chuixue) will leave and is currently handling the handover.

After Chuixue leaves, Taobao Tmall Industry Development and Operation Center will be split into three departments.

Industry development department 1, led by Wang Hai (Qigong), the former head of Taote and 1688, including B series (1688), Taote, clothing industry, etc., driven by richness.

Industry Development Department 2, led by Liu Peng (flower name: Owen), former head of Tmall International, includes five major industries such as electrical appliances and fast-moving consumer goods, driven by brands.

Industry Development Department 3, led by Liu Yiman (flower name: Yiman), the former head of Maochao, is mainly high-frequency business in the field of supermarkets such as food and fresh food, which is integrated from the former local retail Tmall Supermarket, Taocai Cai and Taoxianda.

In addition, 20 also learned that Liu Bo (flower name: Jialuo), vice president of Alibaba, president of Alimama Business Group, and president of Xianyu Business Unit, will serve as the head of marketing for Taobao Tmall Business Group.

Among them, the industry development department 1 and the industry development department 2 can be understood as inheriting the operation ideas of the previous two business units of Taobao and Tmall: a heavier product richness to promote the trend; The other pays more attention to brands and serves mature enterprises.

This kind of organization is directly aimed at allowing each department to play what it is good at to greatly improve business efficiency.

The road to merger has not been smooth

We have previously analyzed that the road to the merger of Taobao and Tmall is not smooth.

The merger needs to be traced back to December 2021, when Alibaba announced the establishment of two major business segments, China Digital Business and Overseas Digital Business, and the logic of organizational restructuring at that time was still integration, removing redundant organizations and personnel, and also kicking off Ali's vigorous "rolling layoffs".

Among them, Dataobao (including Taobao, Tmall, Alimama), B2C retail business group, Taocaicai, Taote and 1688 and other businesses have all been integrated to form the "China Digital Business Sector", which is managed by CEO Dai Shan (flower name: Su Quan).

"At that time, when B and C merged, the idea above should be that since Jiang Fan was also in charge together, there should not be much problem from the organizational structure, and they are all in the big pool of Taobao Tmall, and users are used to using it on Taobao app," an Ali insider recalled, "but in fact, the process of running-in is quite painful."

The reason for the pain is that there is a lot of difference in the business operation logic between B and C.

Tmall pays more attention to making the scale bigger, absorbing and operating brands, and serving mature enterprises. Although Taobao also attaches great importance to turnover, it also attaches importance to driving trends and trends, and spends a lot of energy on products.

In the last merger, it can be seen from the arrangement of the No. 1 position in the industry, Tmall is the strong party of this merger: the person in charge of consumer electronics is He Chunlei (Hua Ming Xuanqing), the original industry head of Tmall, Xu Zhong (Hua Ming Enzhong) of Tmall, and the person in charge of fast-moving consumer goods is Lu Jianmei (Hua Ming Menggu) who was previously in Tmall International Business Department.

There is only one exception, the No. 1 position in the fashion industry, which is held by Taobao's Chen Lina (flower name Qiao Qiao). According to 20 News Agency, Taobao's apparel industry has always been very strong, and it is the only industry with a larger GMV volume than Tmall.

This split reflects the concept of Alibaba's organizational restructuring: faster and more flexible. Since the merger has slowed down the business due to running-in, it is better to abandon the merger and let Taobao and Tmall play their best business capabilities and compete for market positions.

Continue to reduce costs and increase efficiency

Merge and split, not to do useless work. On the contrary, both initiatives point to the same goal, which is to reduce costs and increase efficiency.

In addition to merging, which allows the organizational structure to merge similar items and eliminate redundant personnel, the more critical issue may be to make the distribution of traffic fairer.

Taobao hatched Tmall and continued to give Tmall traffic transfusions, because the latter's budget is higher, so the traffic tends to be more inclined to Tmall, especially in the big promotion. To a certain extent, this has promoted the wave of many small and medium-sized businesses to go shopping, bringing the label of "province" to Pinduoduo.

In the past year, Pinduoduo has become one of the biggest beneficiaries in the wave of cost reduction and efficiency improvement on the consumer side. Pinduoduo's gross profit exploded (the gross profit margin in the last quarter reached a new high of 79.1% in the past three years, and advertising revenue was 28.4 billion yuan, a year-on-year growth rate of 58%; Commission income of 7 billion yuan, a year-on-year growth rate of 102%), is revealing another fact, the advertising and commission contribution of small and medium-sized businesses is still not to be underestimated.

In Daniel Zhang's words, "The result of the final business volume in a particular category, how much Taobao accounts for and how much Tmall accounts for, should be a natural result, not a planned economy." "Letting traffic benefit small and medium-sized businesses and regaining this piece of home is an important proposition for Alibaba."

However, in the case of the consolidation of the past year, according to Alibaba's fourth-quarter 2022 financial report, customer service management revenue (i.e., commission revenue plus advertising revenue) decreased by 9% year-on-year, a decline further several percentage points higher than physical GMV. This reflects a contraction in merchants' revenue on Alibaba. In other words, it didn't effectively meet the challenges of competitors.

The split again is still carried out under the logic of cost reduction and efficiency increase, and is more like a "wartime structure", with its own corresponding goals.

In the first part of industry development, the combination of B series, Taote and apparel industry can carry out more flexible and targeted operations for consumers, so that Taofactory brands, white-label products, Taobao clothing and other products can improve the richness of pallets, and have room for maneuver in price, and further serve small and medium-sized businesses.

Industry Development Department 2 can focus on serving brands, raising GMV, and facing the price war of standard products set off by JD.com and Pinduoduo with tens of billions of subsidies, which is also to further boost the brand's revenue on the platform.

The industry development of 3 departments, focusing on high frequency, continues to drive users' rigid consumption. At present, instant retail has begun to invade the territory of traditional e-commerce. Now the inventory of offline merchants is gradually becoming online, and the epidemic has accelerated this process. Local demand can be directly connected to local supply through takeaway platforms such as Meituan, bypassing traditional e-commerce.

At the earnings conference, Daniel Zhang mentioned that in the future, it will further strengthen the market position of Tmall and Taobao by increasing diversified consumption content to strengthen user stickiness and duration, improve the cost performance of goods, and meet the immediate demand for daily necessities through businesses such as Taocaicai.

Judging from the current measures, Taobao has frequently made efforts on "price power". For example, Hand Tao has been testing the 99 sale channel in grayscale, with unit prices ranging from 1 yuan to 9.9 yuan, and the first batch of investment is aimed at "Tao Factory" merchants with M2C experience. In addition, HandTao has also launched the same price comparison tool, users can directly see the same product on the page, how many pieces Taobao is selling, and what is the lowest price.

However, if you only tilt traffic with low prices as a single goal, this will harm the interests of brand owners, thereby affecting the platform's advertising revenue. Therefore, the split of Part 1 and Part 2 is, to some extent, also the establishment of a firewall, allowing different businesses to use different operational means to achieve the same goal of increasing transaction volume.

Taobao and Tmall guard Alibaba's 1 billion AAC, which has basically covered the largest number of major consumer groups in China. After not releasing GMV and user metrics, Alibaba now highlights another "core asset" that remains stable – the number of consumers spending more than RMB10,000 on Taobao and Tmall remained at about 124 million in the 12 months ended September 30, 2022, with a 98% retention rate.

China's most active consumers of the Internet are still stuck in this field, but need to be better served and activated.