Ele.me's new three-year strategic plan
It has been nearly a year since Alibaba Group launched its 1+6+N organizational transformation in March last year. Ele.me, a subsidiary of Ali Local Life Group, has ushered in new changes and has new thinking about its business direction in the next three years.
According to the exclusive news of 36 Krypton, recently, Ele.me held a meeting of 100 people. It is understood that this is an important regular annual meeting of the Ele.me management team. But this year's 100-person group meeting is a little special, from the perspective of time, not long ago, Ele.me made a major adjustment.
In March this year, Alibaba CEO Wu Yongming issued an internal letter to all employees of Local Life Group, announcing that Yu Yongfu, chairman of Local Life Group and CEO of Ele.me, would step down at the end of Alibaba's current fiscal year (March 31).
After Yu Yongfu steps down, Ele.me will be taken over by a new management team. Among them, the chairman of Ele.me was replaced by Wu Zeming, CTO of Local Life Group, and the CEO was replaced by Han Liu, the head of Hummingbird delivery. It is worth mentioning that Wu Zeming, the new chairman of Ele.me, was born in 82, and CEO Han Liusheng was born in 88, both of whom are young executives.
Connecting the past and the future, Ele.me will open a new chapter under the leadership of a young team. Yu Yongfu said at the meeting of the 100-member group that after the relay of the new management team, Ele.me will go through a new cycle in the next three years, and it will get closer and closer to being able to go public independently.
Wu Zeming, the new chairman, said that he had reached a partial consensus with Alibaba Group on Ele.me's business plan for the next three years.
These new consensuses include: users' consumption habits, in different categories, are developing more and more towards the trend of instant home delivery, Ele.me business flow has largely inherited the development trend of these users, and Hummingbird instant logistics will become the infrastructure in this trend.
Han Liu, the new CEO, shared the two key words of Ele.me for the future from the business operation level, that is, the two strategic directions of "two-wheel drive, four horizontal and four vertical" remain unchanged.
"Two-wheel drive, four horizontal and four vertical" was proposed by Yu Yongfu, who previously emphasized that the essence of the local life business is a two-wheel drive business of "instant business flow" and "instant logistics". The four verticals are business assets, namely elm super APP, real-time business flow supercomputing platform, real-time logistics super-network, and real-time logistics supercomputing platform;
In addition, two new tracks were proposed at the meeting, which will serve as the second growth curve of Ele.me. One is to do instant retail that is in line with Ele.me's characteristics, and the second is to emphasize the need to build a real-time logistics network that extends to market value.
The young manager took over Ele.me, adding more imagination to the development of the business. Overall, the new management team has new thinking about the future development direction of Ele.me, and new opportunities are emerging.
How's it going to be hungry?
After the major adjustment of Ele.me, the convening of this meeting also released a signal to the market, that is, Ele.me should go all out in local life and find new incremental space. At the same time, this is also a powerful response to Ele.me's previous sale rumors.
At the end of last year, there were many rumors in the market that "Ele.me is going to be sold" and "Douyin will buy Ele.me", and Ele.me denied the above rumors. In January this year, Yu Yongfu also clearly refuted the rumors, saying that "what is fake can only be fake after all". In February, at Alibaba's financial report meeting, Ali also refuted rumors related to "intent to sell Ele.me", saying that Ele.me is a very important asset in the near field, and the company has no plan to sell it.
The rumors stop at the facts, and Ele.me does play an important role in Ali's local life. So, how is Ele.me developing?
In February this year, Alibaba released its financial report for the third quarter of fiscal year 2024, which showed that driven by the healthy growth of Ele.me and the rapid growth of AutoNavi, the orders of the local life group increased by more than 20% year-on-year, and the annual active consumers continued to grow month-on-month, exceeding 390 million, and the annual consumption frequency of users also showed strong year-on-year growth.
Against the backdrop of continuous improvement in business scale and operating efficiency, Ele.me's losses continued to effectively narrow, driving the accelerated narrowing of Local Life Group's adjusted EBITA (operating profit and loss) to RMB2.068 billion. Compared with the same period last year, the loss has narrowed from 2.923 billion yuan to three percent.
Source: Alibaba
Ele.me's losses have narrowed, which is considered to be a good progress compared to the past, sending a positive signal to the market. And this is thanks to a series of layouts and actions behind Ele.me.
In June last year, Ele.me held the 2023 Summer Merchant Conference, at which Ele.me announced the establishment of an open platform department and increased strategic investment in merchants from six aspects. In the context of the era of "everything at home", the boundaries of retail have been constantly broken, the instant retail track has exploded, and Ele.me has also continued to increase its investment in the instant retail business. During 11.11, Ele.me announced the launch of the "Double Hundred Plan", which will work with 100 retail brands to achieve 100% growth in two years.
Entering 2024, Ele.me has also established a new company in Shenzhen with a registered capital of 10 billion. According to Tianyancha, Shenzhen Lazas Network Technology Co., Ltd., with a registered capital of 10 billion yuan, has a business scope of software development, network technology services, information system integration services, electronic product sales, etc. According to shareholder information, the company is wholly owned by Lazas Network Technology (Shanghai) Co., Ltd., an affiliate of Ele.me.
Source: Tianyancha
Of course, Ele.me also faces challenges. After the spin-off and reform of Alibaba, each business group has the possibility of independent financing and listing, and will be responsible for its own profits and losses. As a part of the local life group, Ele.me, which is still losing money, needs to further think about how to make a profit and find a clear growth path.
In addition, Ele.me is also facing fierce market competition. When it comes to Ele.me, it is indispensable to talk about Meituan. In the field of local life, Meituan temporarily occupies the leading position, accounting for the majority of the market share. The report shows that in 2023, the total transaction volume of Douyin's life service platform will increase by 256%, and the stores will cover a total of 370+ cities, compared with last year, the platform's short video transaction volume will increase by 83%, and the platform's live broadcast transaction volume will increase by 5.7 times.
Douyin Life Service 2023 Annual Data Report Source: Douyin Life Service
Douyin is a newcomer to local life since it entered the local community in 2018, but its strength and growth potential cannot be underestimated. The giants gather to live locally, and no one wants to miss out on the dividends, and there is no doubt that Ele.me is under a lot of pressure.
The war on local life has begun
According to a report by iResearch, the size of China's local life service market was 19.5 trillion yuan in 2020 and is expected to grow to 35.3 trillion yuan by 2025.
With a huge market space and high-frequency, stable consumer demand, today, the competition for local life is more fierce than ever.
In addition to the above-mentioned Meituan, Ele.me, and Douyin, Kuaishou has also found an increase in local life. According to data, in the fourth quarter of 2023, the number of users who placed orders in Kuaishou Local Life increased by 23 times year-on-year, and GMV increased by 25 times year-on-year. This year, Kuaishou will launch a billion-level platform subsidy and 100 billion traffic to create a new outlet and new increment for group purchase consumption. Kuaishou's ambitions to live locally can no longer be concealed, and platforms such as Pinduoduo, Xiaohongshu, and Channels are also eyeing up.
Nowadays, the local life field is full of gunsmoke. In the local lifestyle market, Meituan temporarily occupies the first place, and has established a strong advantage in terms of delivery capabilities, fulfillment capabilities, and consumer minds. Not only that, Meituan has also continued to adjust on the basis of its original advantages and consolidate its moat.
In February this year, Meituan launched the biggest adjustment since its listing, integrating two originally independent business groups (home and store) and two platforms (Meituan platform and basic R&D platform) and handing them over to Wang Puzhong, senior vice president of Meituan, for unified management. In March, Meituan issued an internal letter announcing the establishment of a platform product department, headed by Tao Xuexuan. At the same time, a design department is set up under the platform product department to integrate the company's design department resources such as store and home, and Zhang Guozhong, the former head of the store design department, is in charge.
Meituan's major organizational restructuring and continuous self-transformation have also added more gunpowder to the competition in the local living market this year.
In general, the only constant in the market is the change itself. In the face of new market trends and a complex competitive environment, Ele.me actively embraces changes, ushers in a new management team, and starts new thinking, let's wait and see what opportunities and challenges will be ushered in in the future.
Author | Pandora