01
Stabilize the main business
Not long ago, Jack Ma posted an open letter on Alibaba's intranet, summarizing Alibaba's changes over the past year, and by the way, expressing support for the reflection of the group's chairman of the board of directors Tsai Chongxin, who admitted in a conversation with investors in early April, "We know that Ali is lagging behind because we have forgotten who our real customers are." Alibaba's real customers are people who use its app to shop, and Ali doesn't give them the best experience."
Alibaba's market capitalization has not risen as a result of a series of reforms
These reflections from the founders have not been uncommon in the past year, but unfortunately the implementation has not been smooth. Since March last year, Alibaba has undergone a dizzying series of organizational reforms, business spin-offs and personnel changes. First of all, it announced that the company's business will be split into several business groups and companies of "1+6+N", and set up six business groups and a number of business companies, including Alibaba Cloud Intelligence, Taobao Tmall, Local Life, Cainiao, International Digital Commerce, and Dawen Entertainment, each of which implements the CEO responsibility system, independent and self-financing;
However, these business monetization plans have been bumpy. Not only has the listing plan of Hema been suspended, but the transformation of discount stores has also been controversial, and there has even been news of asset sales; Cainiao also withdrew its application for listing on the Hong Kong stock market in March this year due to internal strategic adjustments; and Cloud Intelligence, one of its strategic focus businesses, will no longer be split.
In all fairness, for a large company like Alibaba, the reform could not have been achieved overnight, but the direction was clear. Like other Internet companies, Ali has also recognized the importance of clarifying its main business, and the burden of blind expansion in the past must be sold or thrown off before it has a chance to wait for the next round of outbreaks.
The cloud business and basic e-commerce of AI are both businesses that Alibaba cannot lose, but AI is still in the investment period and cannot see immediate financial returns; the domestic e-commerce market is still being eaten away by Pinduoduo and Douyin, and the real business growth may still be overseas.
02
New hope for the old faucet
In the overseas e-commerce market, Alibaba has rich experience, and its AliExpress is the earliest cross-border B2C (merchant to user) platform in China. Since last year, Ali International Digital Business Group (AIDC) has become Alibaba's "popular fried chicken", and the fourth quarter of 2023 financial report data shows that among Alibaba's six major business groups, Taotian Group's growth rate is only 2%, and AIDC is far ahead with a revenue growth rate of 44%.
The main engine driving AIDC's growth is AliExpress's fully managed service "Choice", which was launched in April last year. Previously, AliExpress has always been a merchant's self-operated model, and merchants are responsible for all aspects from product selection to after-sales, while under the full custody mode, the platform is responsible for store operation, traffic delivery, warehousing, logistics and distribution, after-sales, etc., merchants only need to provide the price of goods, the platform participates in pricing, and then the merchant will send the goods to AliExpress's domestic warehouse in a timely manner.
Products with a "choice" tag tend to rank high in searches and are very competitively priced
In this way, the delivery is more efficient and the price of the goods is lower, which is naturally attractive to consumers. Some industry insiders believe that TEMU can quickly gain a firm foothold in the North American market, and in addition to large-scale advertising, the full hosting model is the real weapon for its rapid growth. Under the full custody model, a large number of industrial belt factories and traditional foreign trade enterprises have been able to quickly transform into cross-border e-commerce, quickly issue orders, and establish cross-border sales links - in January this year, Choice's orders have accounted for half of AliExpress, entering 55 countries and regions around the world.
AliExpress is indeed as Cai Chongxin said, putting the consumer experience first, but the original seller group of AliExpress has quite a lot of complaints.
As mentioned earlier, unlike TEMU, which was simply launched in a "fully managed" model, AliExpress has upgraded from a "pure platform" business model to a "platform + Choice full custody" hybrid business model, which has a difference in traffic bias. A third-party seller (POP seller) revealed to reporters that the overall traffic of AliExpress has not changed much in recent years, and there will be a wave of increment in 2020 but there will soon be no splash, and now, "as long as the same self-operated product with the Choice target, the sales volume and evaluation are dozens or even hundreds of times that of us, and the search ranking is very high, then we can only spend money on traffic delivery or choose full hosting."
Apparel merchants targeting the North American market consider the fines to be excessive
On the other hand, for Choice consumers, the privileges given by AliExpress also make some sellers dissatisfied. As of December last year, Choice customers in more than 20 countries, including France and Spain, can enjoy return-only service, and can enjoy free shipping in most overseas markets for a single product over $10 or more, or with a purchase of three or more items.
For sellers of products with high customer unit price, cross-border only refunds, and sellers actually have to bear part of the return shipping and quality inspection fees...... AliExpress wants to improve the penetration rate of the fully managed model, and the enthusiasm of merchants may still be a major shortcoming.