According to Bloomberg,Alibaba Group is considering selling its department store and shopping mall operator Intime Commercial.Bloomberg said people familiar with the matter revealed that Alibaba has contacted several companies to understand their interest in acquiring Intime. Even when Tsai Chongxin succeeded Zhang Yong as chairman of Alibaba's board of directors in 2023, Alibaba probably started sales negotiations.Just last month, Alibaba held discussions with a potential buyer.
Zhiwei contacted Alibaba and Yintai Commercial for verification regarding the relevant news, but as of the publication of this article, there has been no response from the public relations departments of both parties.
Alibaba had just refuted rumors that it was planning to sell Ele.me, and now there is news that it is planning to sell Intime Commercial. On the one hand, it shows that the market is sufficiently concerned about how this old king of the Internet will turn around. On the other hand, it also shows that Alibaba has a lot of "sellable" assets on the poker table.
At the end of December 2023, Alibaba stated in the letter to all employees announcing the change of CEO of Taotian Group that the group was preparing to establish an Alibaba Group Asset Management Company.
In that "1+6+N" major organizational change of the group, Alibaba positioned "1" as an investment holding company, and devolved all specific businesses to the business group level. The main function of the Alibaba Group level is to manage the group's assets and funds.
How Alibaba can improve the quality and value of the group's asset portfolio by appropriately increasing or reducing its holdings of assets, and how to release the value of the company's multi-field businesses through spin-offs, listings or sales have always been issues that everyone is keen to discuss.
Now, the news of the sale of Intime indicates that Alibaba may be reconsidering the "new retail" strategy that has been implemented for many years.
You know, during Zhang Yong's period, Alibaba carried out a series of acquisitions of physical chain stores in an attempt to create a "new retail" model online and offline.
From a timeline perspective, Intime Department Store is the first offline business carrier to carry Alibaba’s new retail. In 2014, Alibaba spent HK$5.3 billion to invest in Intime and became the second largest shareholder. In 2017, Alibaba announced that it would join forces with Intime Department Store Chairman Shen Guojun's wholly-owned company to launch the privatization of Intime for HK$19.8 billion and become Intime's controlling shareholder.
Zhang Yong once said,"Intime is different from Hema. The latter was created out of nothing, and tall buildings were built from the ground to successfully complete the digital reconstruction of people, goods, and places. The former has too much stock, which is similar to the renovation of an old city."
For this reason, Alibaba's new retail banner has gradually been carried by the new internal entrepreneurial project "Hema". Compared with transforming the more traditional department store format, the newly created Hema Xiansheng has a more complete Internet gene since its establishment.
In fact,Hema once assigned a team to Intime to guide its new retail transformation, but later gave up because it was too complicated.
Now that friendly merchants are closing in on Alibaba's core business, Alibaba may have to shrink its front lines. Compared with the Internet transformation of offline retail, Alibaba's top priority is how to develop the core business of e-commerce and revitalize relatively more potential businesses such as cloud services.
Previously, Alibaba CEO Wu Yongming said that Alibaba Cloud and Taotian Group are the strategic focus of the entire group. Therefore, the main reason why Alibaba is considering selling Intime may be to travel lightly and focus on e-commerce business.
In terms of the impact of the external environment, Alibaba has gradually divested itself of operations-, management-, and asset-heavy businesses, which is in line with the overall development trend of the consumer Internet. Consumer TMT analyst Wei Kang (pseudonym) told Zhiwei that traditional shopping malls like Intime, especially high-end department stores, are seeing increasing penetration of e-commerce.The rate of return is definitely not ideal, and the operating pressure will be increasing in the future., will continue to be cannibalized by e-commerce and affordable goods and services with higher cost performance.
"The emergence of latecomers such as Pinduoduo and Douyin E-commerce has definitely brought anxiety to Alibaba and JD. In recent years, the two companies have been constantly trying to regain the main position of e-commerce. Moreover, Pinduoduo has no offline business, no finance, no local life, and its valuation exceeds Alibaba and JD.This proves that over the past eight years, Alibaba and JD.com have been struggling with new retail and unbounded retail. Not to mention a complete failure, their performance is at least mediocre."E-commerce industry analyst Zhang Nan (pseudonym) told Zhiwei.
After all, if you work in the Internet, even if you reach the size of Alibaba, you still have to talk about ROI.
From Alibaba's own perspective, it has now reached a stage where it needs to adjust its new retail strategy.
Zhang Nan said that it turned out that Zhang Yong proposed three major strategies of domestic demand, globalization and high technology when he was here. Intime, RT-Mart and Hema were part of the domestic demand strategy. Later, the three major strategies proposed by Dai Shan were user first, ecological prosperity, and technology-driven. Now, Wu Yongming has not seen any new ideas in terms of strategic deployment, but in any case, the strategic direction is changing, and these three offline retail companies must make adjustments. "A merger between RT-Mart and Hema is also possible. "
In 2017, Alibaba officially took control of Intime, which was during the climbing period of Alibaba's e-commerce business. Zhang Nan said,Intime has brought many well-known clothing brands to Tmall, which has promoted Alibaba's business.
"Around 2010, not many brands were willing to open stores on Tmall. This situation changed a year after Alibaba went public in 2015. Intime had thousands of well-known brand merchant resources, and Tmall at that time definitely needed Intime." Zhang Nan added that in addition to business help, Intime boss Shen Guojun was "recruited" to work in rookie logistics, which made it much easier for Alibaba to acquire land.
Today, there are more than 300,000 brand merchants on Tmall. Whether it was brought about by Intime itself or the chain reaction caused by its own appeal, Intime has contributed a lot.
Another most intuitive contribution is financial. Zhang Nan said frankly that Alibaba is willing to spend a lot of money on the new retail sector including Sun Art Retail, Intime Department Store, and Hema just for the sake of the numbers on the books. "These are just financial indicators that allow Alibaba to increase revenue. In the past, Alibaba's revenue was much less than JD.com, and the self-operated model of supermarkets can directly and quickly bring in revenue."
Intime saved Tmall from the fire, and Shen Guojun established the Cainiao Logistics empire; Sun Art Retail brought revenue growth most quickly and directly, making the book look better; Hema also brought revenue like Sun Art, and in addition there were two more values: it recruited a rival executive, Hou Yi from JD.com, and set a model for new retail.
Now,Yintai helped Ali complete phased tasks, his contribution is indispensable, and he will retire after his success.
Zhang Nan said that the value of Intime to Alibaba is now very low. "Previously, Yintai also established an MCN company to train all offline shopping guides into anchors, and then seek growth on Tmall. Unfortunately, three years have passed, and Yintai's MCN company has not created a super anchor, and no specific and eye-catching performance data has been seen."
To put it ruthlessly, the "Intimes" who once brought many bright spots to Ali's performance are now more like a heavy burden. But the business world doesn't talk about emotions. Cooperation is win-win, and it's easy to get together and separate easily.
Looking at Alibaba’s investment experience in the past ten years, in fact, Alibaba’s external equity investments have always focused on several major business sectors it operates (logistics, finance, entertainment, e-commerce retail sectors, and AI-related technology companies).
Whenever Alibaba tries to expand its business, it adopts the "asset-heavy, operation-heavy" model of controlling acquisitions and then running the business itself. From a moat perspective, this is understandable.
But for comparison, Tencent’s investment strategy is that in addition to its main business, it also invests heavily in areas that it is not directly engaged in, such as e-commerce, local services, and education.
In other words, Tencent focuses on its main business and then expands into new tracks through equity investment.
Now that Ali's financial reports are under pressure and the external environment has deteriorated, it is both inevitable and helpless to shift from heavy to light.
Regarding this matter, a former Yintai person told Zhiwei,“Alibaba’s broken arm in new retail is not a bad thing.”
Wei Kang also believes that,"If assets like Intime are really divested by Alibaba, regardless of whether it suffers a loss, it will be a good thing for Alibaba's main business of Taotian."
However, Wei Kang also pointed out that the overall physical department store industry is in a sluggish state and its size is not large. It is still unknown who can take over Intime's market and how much discount it will take to take over.
This may be the reason why the deal is pending.