Yu Yongfu's internal response to the rumors that Ele.me was acquired: fake

For Ele.me, focusing on strategy, stabilizing the morale of the military, and maintaining the rhythm of progress according to the plan are the most important things.

Text丨Guan Yiwen Shen Fangwei

Editor丨Guan Yiwen

"LatePost" exclusively learned that in response to the rumors of Douyin's acquisition of Ele.me in the market, on January 24, 2024, Yu Yongfu, chairman of Ali Local Life Group and CEO of Ele.me, clearly refuted the rumors to all employees on the company's intranet, saying that "fake can only be fake after all".

An Ele.me person told LatePost that at the end of December last year and in January this year, Yu Yongfu made it clear to the core management team that Ele.me would not be sold, "absolutely impossible", and Ele.me has also refuted rumors several times, but the acquisition rumors are still continuous.

In this regard, Yu Yongfu responded in the Ele.me intranet, saying, "You may feel that you have heard the most authoritative from me, so you will respond positively to you again." ”

In addition to responding to the acquisition rumors, Yu Yongfu and his 11 core executives of Ele.me also answered questions about business development in a post titled "Three Questions from Class Committees", emphasizing that Ele.me is healthy in its pace of efficiency improvement. However, the content does not involve specific business strategies, but more about the collective transmission of confidence from the management to employees.

In the past three years, Ele.me has not been the most high-profile company on the Internet, and after Yu Yongfu took over, Ele.me has spent most of its time in internal reforms, emphasizing a work culture of "pragmatic self-drive" and "finding bugs every day to solve bugs", and focusing on improving efficiency and steady development of the business.

Yu Yongfu: "Ele.me will not be acquired by Douyin"

Since November 2023, there have been many rumors in the market such as "Ele.me is going to be sold" and "Douyin will buy Ele.me".

A number of Ele.me employees told LatePost that they basically have two attitudes towards the acquisition rumors, one is that "Alibaba will not completely give up instant retail", and the other is skeptical and a little anxious because they are worried about the company being acquired.

In the strategic map of Alibaba CEO Wu Yongming, Ele.me is the main business carrier of Alibaba's instant retail business, and in addition, Ele.me is currently the only two core players in the field of home service in China.

Wu Yongming emphasized that the Group will continue to invest firmly in location-based technology services, and continue to focus on two business positions in local life: one is AutoNavi, and the other is Ele.me's instant home technology services.

But capital partnerships are not unfounded. Many Ele.me employees believe that after Alibaba's "1+6+N" reorganization, except for domestic e-commerce and cloud, other businesses have the possibility of capitalization, and Ele.me is no exception.

For a long time, Douyin was regarded by the outside world as the most critical partner of Ele.me in the future. The two parties announced their cooperation in August 2022, and Ele.me will provide Douyin users with home delivery services ranging from content planting, online ordering to instant delivery, based on the Douyin open platform and using mini programs as the carrier.

A person close to Ele.me believes that the background of the cooperation between the two parties at that time was that Ele.me's Hummingbird delivery capacity of tens of millions of orders per day has important value for Douyin to try takeaway and instant retail in the local life business. Ele.me is looking to get more external traffic from Douyin's 600 million daily active users and seek further growth.

"LatePost" learned that Douyin and Ele.me have been discussing how to carry out deeper cooperation between the two sides, and have also discussed the possibility of Douyin investing in Ele.me.

Regarding the acquisition, an Ali person said that there is no proposal to give up Ele.me at the partner level of Ali Group, "Ali will not give up the layout of near-field retail, and Ele.me will still be surnamed Ali in the future, and the topics discussed with any partner are based on this framework." ”

In the post of "Three Questions of the Class Committee" on Ele.me's intranet, Yu Yongfu clearly denied the rumors that it was going to be acquired:

The 11 class committee members conveyed confidence, and "operational efficiency" was the key word

A person close to Ele.me said that last week, the management team of Ele.me held an annual work strategy promotion meeting, "Yu Yongfu is very sure, and the management believes that with the current situation, it is not difficult to continue to maintain growth and optimize operating efficiency, and the arrival of the break-even point is not difficult or far away." ”

In the intranet post of "Three Questions for Class Committees", in addition to CEO Yu Yongfu, there are 11 other class committee members who communicated around it, "operational efficiency improvement" is their common business keyword, and they are also conveying the value of Ele.me and their confidence in the company.

CFO Wang Xing said that the company has returned to its business logic from spending money to buy orders and shares, saying that Ele.me is continuing to move forward on the basis of a balance between growth and efficiency.

As of the third quarter report released by Alibaba in November 2023, Ele.me has had positive unit economic benefits (UE) for six consecutive quarters, and in the third quarter, the revenue growth rate of Local Life Group was 16%, which is the second fastest growing business group of Alibaba after International Digital Business and Cainiao.

Ele.me has also continued to narrow its losses, and in the year ended September 30, 2023, the entire Alibaba Local Life Group reduced its losses by nearly 5 billion yuan, most of which came from Ele.me's contributions.

When Alibaba acquired Ele.me for $9.5 billion in 2018, it proposed to achieve a "five-to-five" market share with Meituan, and since then, Ele.me has spent tens of billions of yuan in subsidies, with a cumulative investment of more than 100 billion yuan to compete with Meituan. However, the market pattern has not developed as expected by Alibaba, and in the continuous struggle with Meituan Takeaway for many years, Ele.me's share once fell to a record low and stabilized at about 30%.

After 2020, after Ali realized that he could not win quickly, he gave up direct competition with Meituan Takeaway and turned his direction to cultivating internal skills. In this context, Yu Yongfu began to take over Ele.me, promoting loss reduction and replenishing basic capabilities. Since then, Ele.me has achieved positive unit economics for the first time in the second quarter of 2022.

Yu Yongfu did not make any immediate move after taking office, he did a lot of research and observation, and 100 days later, at the end of 2021, he sent out his first internal letter to take over local life, mainly talking about four things.

Define a local life business. Yu Yongfu emphasized that the essence of the local life business is a two-wheel drive business of "instant business flow" and "instant logistics", which is very cruel, because no one has a way to win, it is a long-term counting boxing match, which is a battlefield of "point victory", "so basic capacity building is the core." ”

2. Determine the general strategic direction. In his internal letter, Yu Yongfu made it clear that the local life company should focus on the strategic direction of "four horizontal and four vertical" and adhere to it for three years.

3. Boost team morale. The Internet of life services is a big track in the decade, and the requirements for capabilities are more complex and higher, so the "two-way amplitude" of financial returns for people in it is greater.

4. Give a way to do things. Quite simply, it is to "find problem cases" and "solve problem cases", and the best way to improve user merchant experience and improve business efficiency and quality is to "solve bugs".

Since then, Ele.me has abandoned the subsidy strategy of flood irrigation, and no longer issued a large number of subsidies for short-term increase in the national market, but increased subsidies for target consumers in first- and second-tier cities and improved subsidy efficiency. At the same time, the company has also promoted the construction of a new advertising product system and optimized redundant personnel to reduce costs and increase efficiency.

In 2023, Ele.me will focus on about 40 first- and second-tier cities, focusing on increasing customer unit price and user growth, keeping the people with the most spending power, and pursuing more efficient business in every business. Previously, some lower-tier cities that were at a disadvantage in terms of market share had given up direct sales and switched to lower-cost agency service providers.

"LatePost" learned that at the end of December 2023, Ele.me COO Chen Weiye (nickname: Chuduan) returned to Taotian Group to be responsible for Taobao and other business divisions, and several Ele.me business sectors he was originally in charge of were handed over to members of the Ele.me class committee.

A month later, around the "four horizontal and four vertical" organizational design, Yu Yongfu further adjusted and optimized the structure: at present, Ele.me is forming a management team with user operation (C), merchant ecology (B), hummingbird logistics (D), instant retail (R), and middle office strategy (O) as the core business core.

A big change is the Ele.me intra-city retail business center, which was directly taken over by Hu Qiugen (nickname: Genxian), who was formerly in charge of the user operation center.

"LatePost" learned that Hu Qiugen previously worked in Tmall and Freshippo, successively served as the head of Tmall search business, CMO of Freshippo, and general manager of Hema Xiansheng's national store operation and management, and has rich experience in the field of new retail. In November 2021, Hu Qiugen was transferred to Ali Local Life, and successively served as the head of the business operation department of Ele.me Daojia Business Center and the head of instant retail business.

A second-level person who has been paying attention to Ele.me for a long time judged that in addition to improving the efficiency of the company's overall operation, in 2024, instant retail will be the direction of Ele.me's key investment and efforts.

On November 17, 2023, Ele.me made it clear for the first time that "instant e-commerce is an important strategic choice for Ele.me", and in the third quarter of last year, Ele.me's non-catering delivery orders achieved double-digit growth, mainly in the five key sub-sectors of medicine, fresh food, supermarkets, wine and beverages, and department stores.

At Alibaba, which is known for "embracing change", the internal management has always emphasized the work mentality of "solving bugs every day". For Ele.me now, focusing on strategy, stabilizing the morale of the military, and maintaining the rhythm of progress according to the plan are the most important things.

Image source: Visual China