Wu Yongming, CEO of Alibaba Group and Chairman of Taotian Group, issued two letters to all employees in a short period of time. First, he announced that he would concurrently serve as CEO of Taotian Group, and then he replaced all the original Taotian executives and selected a younger team to take office. A series of operations took only 48 hours.
This is not unrelated to the weakness of Taotian's business in recent years. Wu Yongming bluntly pointed out that Taotian should face up to the current situation and start a new business. Jack Ma even said frankly, "The methodologies that Alibaba relied on for success in the past may no longer be applicable and should be changed quickly."
Some experts told Sina Technology that Alibaba is currently hesitant about its Taotian strategy and its positioning is still not clear enough. "We had to separate before, but now we have to unite. Although each has its own goals, turbulence in business strategy and management is detrimental to the stability of the company."
Is growth becoming increasingly sluggish, turning from a "big leg" to a "laggard"?
Taotian Group's coaching change has been foreshadowed for a long time. During this year’s National Day, when Dai Shan was leading Taotian to prepare for Double 11, news came out that Taobao Tmall Business Group was planning a coaching change. Dai Shan, CEO of Taotian Group, would step down and Jiang Fan would take over.
The message also clearly stated that "this personnel change will occur within a few months at the earliest and is currently being planned." Although Taotian called the content fabricated sources and conjecture at the time, and initiated legal proceedings. But today's facts prove that Taotian's coaching change has long been a sign.
On the one hand, Taotian Group’s growth is indeed weak. According to this year’s Q3 quarterly report, Alibaba Group’s revenue increased by 9% year-on-year, and its operating profit increased by 34% year-on-year. But the day after the performance report was released, Alibaba’s stock price fell by more than 9%. Some insiders pointed out that although Alibaba managed to hold on to its position based on the overall performance of the financial report, the core Taotian data showed weak growth, which became the biggest negative factor for the stock price.
See the financial report data for details. The financial report shows that Taotian’s group revenue was 97.65 billion yuan, a slight increase of 4% year-on-year, of which revenue from China’s retail business was 92.56 billion yuan, a slight year-on-year increase of 3%. Looking at the entire group, Taotian's Q3 revenue accounted for 43.4% of the total group, which was a significant decline from 49% in the second quarter, and the revenue growth rate was less than half of the total group. From the perspective of market value, Alibaba's stock price has fallen for three consecutive years, and its market value is less than a quarter from its highest point.
In sharp contrast, Pinduoduo has bucked the trend and overtaken it this year. In the same period of Q3 this year, Pinduoduo’s revenue was 68.84 billion yuan, a year-on-year increase of 93.9%, far exceeding market expectations of 54.8 billion yuan. On November 30, Pinduoduo’s market value officially surpassed Alibaba and became what the outside world calls the “new king” of e-commerce. Now the two sides are competing for a market value of US$190 billion.
This also made Ali panic from top to bottom. "I can't sleep at the moment, and I don't dare to think that the person I look down on will become the big brother after just one chop," an Alibaba employee said on the intranet. Jack Ma could not ignore this powerful opponent. He replied on the intranet, "All great companies are born in winter... I would like to congratulate Pinduoduo for its decision-making, execution and efforts in the past few years. I firmly believe that Alibaba will change, and Alibaba will change."
This may also be the reason why Wu Yongming drastically "cut off" Dai Shan and the original team. In the second letter to all employees, Wu Yongming made a request to Taotian Group: face up to the current situation and start a new business.
However, Pan Helin, a researcher at the International Joint Business School of Zhejiang University, pointed out that Taotian’s current situation cannot be changed by individual figures such as Dai Shan or Wu Yongming alone. "Taotian's current positioning is not clear. If the positioning is clear, it will inevitably need to give up customers on the other side. For example, if it wants to be a low-cost e-commerce company, it will have to give up high-quality customers, and Dai Shan only has two years, and the consumption downgrade trend in these two years is very obvious. Taobao cannot return to its original style of play due to supervision."
Therefore, in Pan Helin's view, the lack of performance is not Dai Shan's problem, nor is it Wu Yongming's problem that can be solved by "just catching him."
The most powerful woman has no military exploits in two years?
It is worth noting that Dai Shan, who was once considered "the most powerful woman in Alibaba", became the CEO of Taotian Group in March this year only nine months ago. Looking back further, at the end of 2021, Dai Shan took over Alibaba's domestic business and managed the "China Digital Business Section" including Taobao (including Taobao, Tmall, and Alimama). In January 2022, after the "Jiang Fan incident" continued to ferment, Dai Shan took over as president of Alibaba's domestic digital business sector. Calculated, Dai Shan has been in charge of Alibaba's richest department for less than 2 years.
After taking office, Dai Shan stopped the development model with GMV as the growth target and began to return to focusing on consumer experience, emphasizing the shift from transactions to consumption. But in fact, as Alibaba's most profitable department, Taotian's top priority is to maintain market share and ensure growth. Dolphin Investment Research has previously pointed out that in the Q3 quarter, although the growth of JD.com and Vipshop was weak, they at least still had positive GMV growth. The market had also expected Alibaba's GMV to be at least flat or slightly increased, but the actual negative growth was a bit ugly.
"This shows that as of the end of September, Alibaba's efforts in 'price power', 'content' and 'private domain' have not taken effect, and Taotian's loss of market share is the most serious." Dolphin Investment Research pointed out.
Jack Ma also sent a signal that Taotian must make changes. In May of this year, Jack Ma pointed out the three major directions of Taobao and Tmall in a small-scale communication meeting: returning to Taobao, returning to users, and returning to the Internet. "The methodologies that Alibaba relied on for success in the past may no longer be applicable and should be changed quickly."
Overall, Alibaba seems to have not stopped changing since "1+6+N".
Pan Helin believes that "Alibaba's current strategy is indecisive. It had to divide before, but now it wants to make peace. Although each has its own goals, turbulence in business strategy and management are detrimental to the company's stability. You must know that Alibaba is currently in a trough period, facing a double attack from cheap e-commerce and high-quality e-commerce, and its own positioning is not clear enough."
In his view, Alibaba’s previous spin-off was to make the pie bigger through spin-off and listing. Because Alibaba took a diversified route in the past, its business needed to be monetized and gain market recognition. "The current merger of Taotian is to see the value of combining AI and e-commerce, but this value requires a lot of resources to complete development. It can be said that the idea of realization has returned to the idea of entrepreneurship. Therefore, there is indeed some repetition."
"This may be Ali's last adjustment in 2023, but it may not be Ali's last adjustment," Pan Helin said.
Text | Sina Finance Yuan Yiming