Cai Chongxin doesn't take the blame, is Ali's winter coming?

Author | A look at finance Qiu Qiu

Edit | Xibei

Recently, the news about Alibaba's reflection and change has attracted widespread attention in the market. On April 10, Ma Yun, who had faded out of management for a long time and had not posted on Ali's intranet for 5 consecutive years, posted a long post entitled "To Reform and Innovation" on Ali's intranet to share his views on the company's reform and innovation.

Regardless of the content of the post, the act of posting alone has led to the market's regeneration of the conjecture that the legendary founder will return to Rongma and take the helm of Alibaba. Judging from the content of the post, Ma Yun mainly expressed his full support for the current helmsman of the company, Ali Chairman of the Board of Directors Tsai Chongxin and Group CEO Wu Yongming, and stood for a series of reforms carried out by them. However, what the outside world is curious about is whether Tsai Chongxin's reflection is excessive, and whether Ali's winter will really come?

01, Cai Chongxin does not take the blame

"In the past few years, Alibaba has lagged behind, and Taotian's problem is to ignore the user experience, and the entire group has been restructured for this purpose," said Tsai Chongxin, co-founder and chairman of Alibaba's board of directors, in an interview with Norway's sovereign wealth fund on April 3, reflecting on Alibaba's performance over the past few years.

This kind of reflection is not new. In November last year, benefiting from the outstanding performance, Pinduoduo's market value once surpassed Alibaba's, becoming the Chinese concept stock with the highest market capitalization. At that time, Ma Yun replied under the employee's emotional post, "Ali will change, Ali will change, all great companies are born in winter." The era of AI e-commerce has just begun, and it is both an opportunity and a challenge for everyone."

Compared with the fanfare reflection, it is worth paying more attention to three questions: where did Ali's winter come from, what changes did Ali make in the winter, and did these changes really help Ali get out of the winter?

Answering where winter came from, there are voices on the Internet saying that "the more Tsai Chongxin reflects, the more embarrassed Daniel Zhang becomes", pointing the finger completely at former CEO Daniel Zhang, which is obviously one-sided, not to mention that in terms of Ali's current partnership organizational structure, judging from the huge influence that Ma Yun still retains within the company, this cause must not be completely attributed to Daniel Zhang.

In this regard, Ma Yun said very clearly in "To Reform, To Innovate": "Facing problems calmly is not to deny the past, but to responsibly find the way to the future."

So what's the problem? Jack Ma's post said that it is chasing KPIs and the disease of large companies. This is too obscure, in the past few years, Pinduoduo has repeatedly chased KPIs centered on the number of packages and the frequency of user purchases, so why can Pinduoduo develop rapidly?

The core lies in the fact that the KPI chased is wrong, and the more essential logic is that Ali's senior management has misjudged the entire Chinese Internet e-commerce industry and even the entire Chinese economy.

In 2016, Jack Ma shouted out the bold words: "Ali can't find an opponent even with a telescope", which implies that when Taobao had about 200 million DAU (daily active users) in 2016, he thought that he had touched the end of the growth of the Chinese market, and that this scale could not have big growth. As a result, the focus of the group has shifted to the so-called "new retail" and "consumption upgrading", and GMV is regarded as the core indicator of the group.

On the other hand, after seeing that there are still a large number of potential needs waiting to be met in China's sinking market, in the vast rural areas and towns, Pinduoduo chose to focus on the growth of the number of users, spared no effort in attracting new users, and continued to "cut a knife", helping Pinduoduo to harvest 400 million DAU today.

In a word, the strategic misjudgment of the entire Ali executive, represented by Ma Yun, and a few key minorities, prematurely believed that they had won the e-commerce war, which led to today's situation.

Reflecting on the reasons, what about the change?

In addition to Jack Ma, Ali's only lifelong partner, Tsai Chongxin re-emerged as the chairman of the board of directors of Alibaba Holding Group, and Wu Yongming, one of the eighteen Arhats, became the CEO of Alibaba Group and a number of other important positions in Alibaba. In the major personnel adjustments, we clearly see that Ali or Jack Ma has handed the baton back to the original founding team.

In addition to personnel, we see that the "1+6+N" strategy proposed by Alibaba a year ago that hopes that its various business groups will be listed independently, and there are also potential adjustments. From the suspension of Alibaba Cloud's spin-off, the contraction of various non-core businesses, to the return of 1688 to Taobao and the suspension of Cainiao's IPO, it shows that Alibaba's strategic change is to return to its main business, take Taotian as the absolute core, give full play to the synergistic effect of the group's major businesses as much as possible, and refocus on the e-commerce business.

These changes are also reflected in the statements of several core leaders of Alibaba, Ma Yun said: The AI era has just arrived, everything has just begun, and we are at the right time; Tsai Chongxin said: we should focus on e-commerce and cloud; Wu Yongming said: user first, AI-driven.

思路很明确，聚焦主业，all in AI电商。

02. It is not easy to reshape the model

It's easy to focus on the main business, but it's not easy to focus on AI e-commerce.

In terms of focus, Ali has indeed acted decisively and made a lot of strategic adjustments by virtue of the pain of being "beaten" by Pinduoduo in the past few years. But there is no answer to what exactly AI e-commerce is.

It is true that Ali has a certain first-mover advantage in basic cloud and AI technology, and Ali itself is also one of the proposers of the concept of AI e-commerce, but what is AI e-commerce, what are the advantages compared with the current shelf e-commerce and content e-commerce, and which consumers are meeting the demands that need to be met. There is no clear answer to these questions.

Maybe you would simply say that this is the general direction of the future.

But as Keynes famously said of classical economic theory, "In the long run, we are all dead".

Consumers, merchants, investors and other parties need to see the substantial changes in their experience after Ali focuses on its main business, otherwise isn't it another kind of "ignoring user experience"?

In other words, the key to the success of Alibaba's transformation lies in whether it can concentrate the group's resources and improve the user experience. Or from the perspective of giant competition, whether Ali can come up with a more competitive user experience after focusing.

Ali's vision is to "make it easy to do business in the world", which is in the early stage of Internet development, Ma Yun hopes to empower small and medium-sized businesses through the Internet, move small and medium-sized businesses online, and help them reach transactions, for which we see that in recent years, Taobao can still emerge some "small and beautiful" Tao brands, which can not be seen on Pinduoduo and other platforms. Essentially, this is the logic of standing on the merchant's side. After the rise of Pinduoduo, this logic has also been widely criticized by the outside world, believing that Ali's emphasis on merchants is to ignore the objective fact that China's supply side is seriously oversupplied and the demand is relatively insufficient.

But the author, I don't dare to agree with such a simple logic of success and defeat, simply imitating the success of Pinduoduo, at most it becomes Pinduoduo, and how can another Pinduoduo defeat Pinduoduo? What's more, this is not what it used to be, Ali has long missed the first few years of lower cost to attract new customers, even if you want to become Pinduoduo, it is not so easy.

But as the saying goes, "three or five years is enough for the Internet industry to turn the world upside down", Pinduoduo is by no means perfect.

It is true that Pinduoduo, taking advantage of China's excess supply, has given consumers the best experience and obtained excess returns in the past few years by squeezing the value of the supply side, but is this kind of model in which consumers and platforms make profits, and merchants only have meager hard money left? Obviously, no merchant in the world is willing to make low-priced white-label goods for a lifetime, and in the case of relatively affordable prices, consumers must also hope that the experience brought by the goods can be upgraded. Ali's opportunity is also hidden in such a simple logic, how to through the upgrading of technology and the design of the model, not only to give consumers high-quality and low-cost goods, but also to give merchants the space for brand growth, and simultaneously improve the user experience of consumers and merchants, which can help Ali regain the lead in the next generation of competition.

It is not yet known what such a model will look like, and whether it will be born in the hands of Alibaba, but it is precisely because we do not know that we are so concerned about Alibaba's series of changes, after all, in the past 25 years, the Internet giant has brought earth-shaking changes to the entire retail industry in China.