Wu Yongming makes the arrangements as Alibaba integrates domestic and overseas e-commerce. | Exclusive from 36Kr.

Text | Peng Qian

Editor | Qiao Qian, Yang Xuan

After Double 11, Alibaba embraces new changes.

36Kr exclusively learned that on November 21, Wu Yongming, CEO of Alibaba Group, sent an internal email announcing the integration of domestic and overseas e-commerce, establishing an e-commerce business group. Jiang Fan will serve as the CEO and report to Wu Yongming.

It is understood that the new e-commerce business group will fully integrate the Taobao Tmall Group, the International Digital Commerce Group, as well as e-commerce businesses such as 1688 and Xianyu, forming a business cluster covering the entire industry chain at home and abroad.

The letter stated, "By integrating all e-commerce resources within the group, stimulating the capabilities accumulated over the years, serving domestic and global consumers well, and simultaneously helping more small and medium-sized enterprises expand in both the domestic and overseas markets."

In September last year, Wu Yongming became the CEO of Alibaba Group. He clearly defined the strategic focus of "putting users first and being AI-driven", made strategic choices, focused on core businesses, and concurrently served as the CEO of the Taotian Group and the Cloud Intelligence Group. He promoted the rejuvenation of the management team and carried out bold reforms in the organizational structure and business strategies.

This change continues the focus on the main business, and at the same time reflects Wu Yongming's important judgment on the future of e-commerce. In the email, Wu Yongming mentioned: "The e-commerce business models in China and globally are entering a new era. The global supply chain capabilities, fulfillment capabilities, and consumer service capabilities will determine the future competitive landscape."

In fact, in the past year, Alibaba's domestic and overseas e-commerce has already made a lot of integrations around these three points: In the middle of the year, a pilot project was launched to offer free shipping for clothing exports, and later the scope was expanded to all categories. At the same time, 1 billion was invested to turn Hong Kong, China into a free shipping area, and an English version was launched in Malaysia and Singapore.

According to 36Kr, behind this is that Taobao in the domestic market is responsible for attracting merchants, while overseas e-commerce is responsible for logistics and consumer operations. After the establishment of the e-commerce business group, domestic and overseas e-commerce can better collaborate to further improve operational efficiency, and Alibaba's e-commerce is expected to usher in a new growth space.

Taobao Moving Towards Comprehensive Overseas Expansion

In fact, the cooperation effect between Alibaba's domestic and overseas e-commerce in the past year has been remarkable: There is not only a comprehensive integration of the supply side from the clothing industry to the entire industry, but also an improvement in the consumer experience such as free shipping investment and the English version.

In mid-July 2024, Taobao, in conjunction with Alibaba's overseas e-commerce, launched the "Global Free Shipping Plan for Large Clothing", featuring "0 returns, 0 refunds, and 0 freight insurance", with the platform providing postage subsidies and marketing expenses. The project officially went live on August 2. Users in six countries and regions including Singapore, Malaysia, South Korea, Hong Kong, China, Macao, China, and Taiwan, China can enjoy free shipping when purchasing clothing on Taobao for 99 - 199 yuan.

This pilot project led to a nearly 40% growth rate in the overall overseas transaction amount of the Taobao clothing industry, and the overseas sales growth of merchants participating in the clothing free shipping program was even more significant, with a nearly 90% increase compared to the same period last year.

Subsequently in September, Taobao's overseas free shipping plan expanded from the clothing category to merchants in all industries, and the free shipping sites were further expanded. And the effect of this year's Double 11 has verified the incremental effect that integration can bring.

Behind this series of attempts, Taobao is responsible for attracting merchants, and Alibaba's overseas e-commerce is responsible for consumer operations. The newly established e-commerce business group is to achieve further resource integration on this basis.

Alibaba is not the only player with both domestic and overseas e-commerce businesses, but others are still in the stage of separate and independent operations. This integration by Alibaba not only demonstrates its determination to invest in the core e-commerce field but also provides a new idea for the e-commerce industry on how to make good use of both domestic and international resources to form a development synergy.

Behind domestic e-commerce platforms such as Taobao Tmall and even 1688 are over ten million merchants, forming the core supply advantage of Alibaba's e-commerce. Connecting these merchants with global consumers through the capabilities of Alibaba's overseas e-commerce and achieving the overall planning of the global supply chain, merchant operations, and platform operations can significantly improve operational efficiency, which will help Alibaba move towards a broader incremental market in the fierce e-commerce industry competition.

Wu Yongming's Bold Reforms

In the past year, Wu Yongming has carried out bold reforms on Alibaba's e-commerce.

First, the "refund only" policy has been relaxed. In July this year, Taobao launched a store experience score system. For merchants with an excellent service score of 4.8 or above, the platform does not actively intervene in "refund only". In the two months since its launch, Taobao has averaged a daily interception of 400,000 abnormal "refund only" orders, and the number of unreasonable "refund only" has sharply decreased.

In September, "Return Insurance" was launched, in collaboration with logistics companies and insurance companies to reduce the return costs for merchants. Nearly one million merchants subscribed to this service in that month. During this year's Double 11, the return cost for merchants using "Return Insurance" decreased by up to 58%.

Wu Yongming proposed that e-commerce competition is not just a single price dimension, but is determined by five core dimensions: richness, good products, good prices, good services, and product experience. This is a shift for the domestic e-commerce industry that is trapped in a serious "low-price involution".

In the field of user experience, Alibaba's e-commerce investment is more determined.

In the logistics field, the promotion of free shipping is more thorough to establish a platform service mentality. In March this year, the Taobao Xinjiang Free Shipping Channel was launched. By the eve of this year's Double 11, Tibet, Qinghai, Ningxia, Gansu, and Inner Mongolia have all become Taobao's "free shipping areas".

At the user level, the rights and interests of 88VIP members have been comprehensively upgraded around the core user base. From November last year to the end of September this year, the number of 88VIP members has increased by 14 million, with a growth rate of 43.7%, reaching 46 million.

In addition, in September this year, Taobao took the lead in the industry to enable interconnection and interoperability, supporting multiple payment methods including Alipay, WeChat, UnionPay, etc., leading the industry to break out of the mindset of stock competition and cooperate to expand new growth spaces. According to the QuestMobile report, it is expected that the monthly active users of Taobao are expected to exceed 1 billion by 2025.

In the recent quarterly earnings analyst call, Wu Yongming believes that this is not only a positive cycle formed by Alibaba's insistence on "putting users first" and investing in the merchant ecosystem construction, but also marks a new starting point for the industry to return to a value-oriented approach.

The integration of domestic and overseas e-commerce on this basis is to further expand from the incremental level along the direction of returning to value.

According to third-party research data, as of the middle of 2023, 29.5% of large enterprises have implemented an overseas expansion strategy, while the proportions for small, medium, and micro enterprises are 39.4%, 17.5%, and 13.6% respectively, and this number is still growing.

In the past two years, many cross-border e-commerce platforms, including Alibaba International, have relied on the strong manufacturing capabilities, supply chain, and logistics foundation in China to emerge rapidly in overseas markets with diverse models, and have accumulated relatively mature fulfillment infrastructure and user operation capabilities in overseas markets.

This lays the groundwork for what is mentioned in the internal email: "Stimulating the capabilities accumulated over the years, serving domestic and global consumers well, and simultaneously helping more small and medium-sized enterprises expand in both the domestic and overseas markets."

It is expected that after this integration by Alibaba, a more significant synergy effect will be achieved, helping merchants reach a larger market in China and even globally.

Dear Alibaba Employees:

In the past year, Alibaba has adhered to the strategy of "putting users first and being AI-driven", reshaped business priorities, and orderly advanced various reforms. Each business sector has maintained a healthy growth. With the rapid progress of the times, the 25-year-old Alibaba still needs to maintain an entrepreneurial mindset, continuously innovate, fulfill the mission of serving small and medium-sized enterprises, and continue to create value for the society.

Standing at a new starting point, the group has decided to establish the Alibaba E-commerce Business Group, appointing Jiang Fan as the CEO, who will report to me. The e-commerce business group will fully integrate the Taobao Tmall Group, the International Digital Commerce Group, as well as e-commerce businesses such as 1688 and Xianyu, forming a business cluster covering the entire industry chain at home and abroad.

The e-commerce business models in China and globally are entering a new era. The global supply chain capabilities, fulfillment capabilities, and consumer service capabilities will determine the future competitive landscape. The Alibaba E-commerce Business Group will stimulate the capabilities accumulated over the years by integrating all e-commerce resources within the group, serving domestic and global consumers well, and simultaneously helping more small and medium-sized enterprises expand in both the domestic and overseas markets.

E-commerce business and AI technology are the most critical development directions of the group. In terms of AI, we will continue to increase investment, promote an AI-powered productivity revolution, improve the AI infrastructure and supporting system, adhere to open source and openness, and continuously invest in the R & D of AI products in the toB and toC fields to seize the opportunities of the AI era.

At the same time, to ensure support and guarantee for the core strategic directions, the finance and legal lines will be managed uniformly by the group. The finance and legal leaders of each business sector will report directly to the Group Chief Financial Officer Xu Hong and the Group Chief Legal Officer Yu Siying respectively.

The above decisions take effect immediately.

Wu Yongming, CEO of Alibaba Group

November 21, 2024