Late exclusive private meeting with Jack Ma, three directions for the future of Taobao and Tmall

Tech 2023-06-19 17:07:48 Source: Network

Returning to Taobao, Returning to Users, Returning to the Internet.Wen | Zhu YingliEditor | Gao HonghaoLatePost exclusively learned that in late May, Alibaba founder Jack Ma convened various business leaders of Taotian Group to hold a small-scale communication meeting

Returning to Taobao, Returning to Users, Returning to the Internet.

Wen | Zhu Yingli
Editor | Gao Honghao

LatePost exclusively learned that in late May, Alibaba founder Jack Ma convened various business leaders of Taotian Group to hold a small-scale communication meeting. Dai Shan, CEO of Taotian Group, Wang Hai (Flower Name: Qigong), Liu Peng (Flower Name: Aowen), Liu Yiman (Flower Name: Yiman), and Cheng Daofang (Flower Name: Daofang), the head of Taobao live streaming, all attended the event. It is also understood that Li Bo, CFO of Taotian Group, and Wan Lin, CEO of Cainiao Group, also attended the meeting.

In March of this year, Jack Ma made another public appearance after three years, discussing future education with the principal of Hangzhou Yungu School as a teacher. In May, he was employed as a visiting professor by the University of Tokyo. But he has always been concerned about Alibaba's business.

It is understood that Jack Ma is still in his retirement state, and this communication meeting did not have a clear theme. In terms of format, the attendees sat around and had a lively chat, more like a communication meeting where Jack Ma had a deeper understanding of his business.

At the meeting, Jack Ma made some of his own judgments and encouraged executives to emancipate their minds and innovate boldly in spirit.

According to multiple Alibaba employees, Jack Ma believes that the current competitive situation faced by Taotian Group is very severe. Taking Nokia and Kodak as examples, he believes that a company from industry benchmark to death, six months to a year is enough, and this speed may be faster in the internet industry.

According to the calculation data obtained from analysts and related companies in Late LatePost, the total order GMV (total sales) of Pinduoduo and Tiktok e-commerce in 2022 has exceeded 50% of Ali's domestic e-commerce business. On the revenue side, in the first three months of 2023, Pinduoduo's revenue has reached 62% of Ali's domestic e-commerce business revenue.

Returning to Taobao, Returning to Users, Returning to the Internet.618

Next is the opportunity on Taobao

In 2015, Zhang Yong became the CEO of Alibaba. At that time, he was optimistic about China's consumer upgrading, causing Taobao to tilt a large amount of traffic towards Tmall to support the rise of brand merchants, and as a result, Alibaba gained more commercial income. Until 2022, 70% of Taobao Tmall's revenue comes from brand merchants.

But eight years later, the overall environment changed. Jack Ma judged that the current domestic economic downturn and insufficient consumer confidence will continue, so the next opportunity is for Taobao instead of Tmall, and Alibaba e-commerce should "return to Taobao".

Returning to Taobao means that Taotian Group will use greater efforts to support small and medium-sized businesses in the future. Multiple employees have judged that the traffic mechanism of Taobao may also change, shifting from being inclined towards Tmall to being inclined towards Taobao.

In April 2023, Taobao Tmall spun off its industrial centers and established three industry development departments based on three major standards: richness, brand, and high frequency. Among them, Part 1 focuses on the development of diverse industries, which is led by Wang Hai (Flower Name: Qigong), a partner of Alibaba and Vice President of Taotian Group. The core task is to explore cost-effective products and expand more individual businesses. On May 10th, the department was renamed as the "Small and Medium sized Enterprise Development Center".

Returning to Taobao will also bring a series of chain reactions. For example, after the distribution of traffic changes, the revenue model of Alibaba's domestic e-commerce will also be adjusted accordingly.

Jack Ma mentioned Alibaba Mama at the meeting, which is an advertising and marketing platform under Alibaba. He believes that this business, which relies on selling traffic to brand merchants, has been making money lying down in the past.

Ali's mother's original intention was to enable even small businesses to buy and sell advertisements, so she wanted to help small and medium-sized businesses, "Ma Yun said at the meeting. He suggested that the team should focus more on product innovation in the future, such as combining AI services with small and medium-sized businesses to "do small business".

During the "618" event, Taobao and Tmall launched the "Taobao Good Price Festival" specifically aimed at small and medium-sized businesses. Liu Bo (flower name: Jialuo), the head of Alibaba Mama, stated in a media group interview on June 18 that helping small and medium-sized businesses issue orders this year is an important assessment indicator for them. However, he also mentioned that in terms of traffic changes, they will not completely turn the gun head, but will rhythmically drive the transformation.

Returning to Users, Returning to the Internet

The concept of "returning to users" proposed by Jack Ma at the meeting is not a new one.

At the beginning of 2022, Dai Shan, who had just become the president of Alibaba China's digital commerce division, talked about "returning to users". At that time, she called off the development model aimed at GMV growth, emphasizing the focus on user experience. In April of the same year, the primary focus of the user development and operation center on Taobao was also changed from annual active buyers (AAC) to daily active users (DAU).

The number of active buyers per year refers to the total number of buyers who have made at least one purchase on the platform within a year, which usually reflects the total size of a platform's real users. This was once one of the most important indicators for e-commerce platforms. But as the number of annual active buyers on various platforms approaches its peak, how to improve the stickiness and repurchase rate of existing users has become the key to competition. The number of daily active users is a more suitable indicator for the current stage.

Over the past year, the number of users of Taobao Daily Life has not risen too much, and it has even been surpassed by Pinduoduo, with a stable gap of about 30 million. However, from March 2023, Taobao will be back to the super market, with an average daily live user of 377 million, 26 million higher than Pinduoduo.

A Taotian employee told LatePost that although many people have realized the importance of daily active users and daily active buyers (DACs) over the past year, a comprehensive consensus has not yet been formed.

For example, the User Development and Operations Center was the first to make adjustments by establishing a homepage and recommendation product group. By adjusting the algorithm weight, it focuses on recommending products with higher conversion rates and longer user stays. However, in the industry center responsible for connecting merchants, sales and commercialization revenue remain their top priority goals. In the "Double 11" of 2022, Taobao and Tmall are still pursuing to make consumers buy more and more expensive.

It was not until April 2023 that all departments finally unified their target direction. The consensus was also fully formed at this time - the transaction volume should be a natural result of the DAU/DAC increase; Commercial revenue is ranked at the bottom, and it is also considered a natural outcome for users returning to Taobao.

The transformation is more evident in this year's 618. For example, in the consumer electronics industry, Taobao and Tmall used to focus on products with high unit price, such as Apple phones, in order to achieve total transaction volume. This year, they abolished relevant subsidies and instead focused their money on products that can bring user activity, such as phone cases, stickers, charging cables, and other low-priced products that can bring repeat purchases.

Employees have different understandings of Ma Yunti's "return to the internet". Some people believe that this refers to the need for Taobao to bring users a sense of surprise when shopping again. Another mentioned that returning to the internet means paying more attention to the growth of user duration and scale. For example, the current basic volume of Taobao live streaming is still too small to have an internet effect.

An Alibaba source told Late Post that Ma Yun's emphasis on "returning to the Internet" might be influenced by Charlie Munger's comments.

In February 2023, the American investor stated at the Daily Journal's annual shareholder meeting that investing in Alibaba was one of his most serious mistakes. "I was fascinated by their position in the Chinese internet industry, but I didn't realize that they were still just a damn retailer

The above insider stated that Jack Ma has never believed that Alibaba is engaged in traditional retail, and Munger's evaluation has transformed Alibaba from a mythological story to a non 'sexy' retail company.

Alibaba was one of the earliest companies to integrate the internet with business. Jack Ma uploaded factory information to the internet and created a wholesale business website 1688; Afterwards, he transformed and founded Taobao, a consumer oriented e-commerce platform that only matched transactions and did not involve traditional retail links such as supply chain and logistics, and achieved great success; In the mobile The Internet Age, Taobao Tmall has always maintained its first position in the industry.

However, since 2018, as domestic e-commerce users gradually become saturated, Pinduoduo and Tiktok and other competitors grow, Taobao's platform effect advantage has gradually lost. In order to win the competition, it began to continuously expand its business territory and make increasingly heavy investments in traditional infrastructure. In some industries, such as home decoration and home furnishing, Alibaba must also delve into the supply chain to solve the problem of smooth transactions. In order to grow, Alibaba also had to involve self operated businesses, and even had the idea of "building another JD" in 2022. From these perspectives, the business of Taobao Tmall is indeed getting closer to what a retail company needs to do.

It is still unclear how Taobao will "return to the internet". After Ma Yun's speech was conveyed by the internal team, frontline employees felt that the number of times bosses proposed innovation has increased, while others are not obvious.

The organization needs to be flattened

At this meeting, Jack Ma pointed out the direction of "flattening" for Taotian's organizational adjustment, reducing reporting levels, encouraging youthfulness, and giving senior employees more responsibility. According to multiple employees' predictions, the group will undergo multiple system adjustments such as rank, assessment, and promotion after "618".

A senior Alibaba executive believes that Jack Ma is more sensitive to change, but his retirement has left a gap in corporate governance.

Before retiring, Jack Ma's decision was the rule. Later, he further abstracted these rules into "culture" - for example, when there is a conflict of interest on the platform, we should adhere to "customer first"; 'Because of trust, it's simple' is to hope for sincere and transparent cooperation and communication within the organization; Embracing change "is a requirement for the business. However, as the founder retired and the partners gradually retreated behind the scenes, this "culture" gradually became diluted and could not become an effective way of governance.

After 2020, Alibaba has faced multiple cultural value conflicts. Firstly, an internal post titled 'To Alibaba' stated that Alibaba's senior management is not familiar with the post-90s and post-2000s, and these young employees are no longer able to accept that work is driven by mission and values; Afterwards, the sexual assault incident among female employees in Alibaba sparked discussions both inside and outside the company regarding Alibaba's ice breaking culture, organizational feedback mechanisms, and dilution of values.

An employee once witnessed with their own eyes that a P9 (senior expert or director) had clearly seen a project go wrong, but he was unaware of it when he evaded himself at the management meeting, and ultimately the responsibility was transferred to the frontline executive staff.

However, since the establishment of Taotian Group, some astute old Alibaba employees have observed changes happening: the senior management has become more crisis oriented and sees this business more like their own - they hold frequent meetings and immediately make actionable decisions after the meetings.

Some employees of Taotian Group can already feel that Jack Ma is exerting his influence in specific businesses, such as frequently emphasizing the importance of small and medium-sized businesses internally, emphasizing the need for Alibaba e-commerce to return to the original Taobao ecosystem, and so on.

This non-public meeting between the founders and executives was passed on by word of mouth among employees, daring to innovate. This was the signal they received, and everyone had a premonition that a change had arrived. Who has resistance? Teacher Ma said he will handle it. It's very domineering, "said an employee of Taotian Group.

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