Late Post – a leading Chinese publication focused on in-depth reporting, revealed yesterday (19 June 2022) that Jack Ma had called for an ‘unofficial meeting with no specific agenda’ with key executives of business units under Taobao/Tmall Commerce Group

Ma, who is now in retirement (and spends some of his time teaching in Tokyo), has become more involved in steering the restructuring of Alibaba Group. Taobao/Tmall Commerce Group is one of the six individual companies after the restructuring. 

According to the Late Post report, attendees of the meeting include Taobao/ Tmall Commerce Group’s CEO Trudy Shan Dai (戴珊), key executives Wang Hai (汪海), Liu Peng (刘鹏), Liu Yiman (刘一曼), Head of Taobao Live Cheng Daofang (程道放), Taobao / Tmall Commerce Group’s CFO Li Bo (李博) and Cainiao Group’s CEO Wan Lin (万霖). 

Some highlights of the meeting:

  1. Jack Ma thinks Taobao / Tmall Commerce Group is currently in a highly challenging situation

As mentioned in our Ecommerce in Southeast Asia report, Taobao & Tmall’s overall market share has reduced from >75% five years ago to about 50% now, as Pinduoduo and Douyin are eating away at the ecommerce pie in China.

2. Jack Ma pointed out that the logic Alibaba relied on for its past success no longer applies, and swift changes are necessary.  He pointed out three directions for Taobao / Tmall Commerce Group: Returning to Taobao, returning to users and returning to the internet.

3. “Returning to Taobao” implies Taobao / Tmall Commerce Group will return to its roots of supporting small and medium-sized businesses. 

This means that the traffic distribution mechanism will also undergo some changes: In the past few years, traffic has been directed to Tmall (with higher average order value, through tactics like giving out Tmall vouchers); now, traffic will shift back to Taobao. 

This will also lead to a series of changes. For example, Alimama (the advertising platform of Alibaba) will return to its roots, enabling small businesses to buy and sell advertisements. 

4. “Returning to users” implies the focus of growth will be shifted from growing Gross Merchandise Value (GMV) and Annual Active Customers (AAC) to growing Daily Active Users (DAU). 

Annual active customers refer to the total number of buyers who have made at least one purchase on the platform within a year; however, at the current stage as the growth of Annual Active Customers slows (some say to a halt), increasing user stickiness and repurchase rate naturally became the key – thus the focus on DAU. 

Transaction volume (i.e.: GMV) should be the natural result of increased Daily Active Users and Daily Active Customers.

5. Jack Ma also suggested a ‘flatter’ structure for the group with reduced reporting levels,  and advocated for ‘youthfulness’, and ‘giving more ownership and responsibility to senior employees’. 

Since its announcement of the 1+6+N restructuring, Alibaba has been moving faster than many had anticipated

Many Alibaba employees have also noticed changes taking place recently: ‘senior management has become more aware, have a greater sense of urgency and has started treating the business as their own – they hold frequent meetings and make actionable decisions immediately after the meetings’. 

Now the question is – will Alibaba’s recent radical (and rapid) restructuring give Lazada (currently under Global Digital Commerce Group) the impetus to catch up with Shopee in Southeast Asia? 

Find out more about Lazada’s odds in Southeast Asia in our latest Ecommerce in Southeast Asia report. 

We will also be holding an exclusive briefing for report holders at the end of the month. Stay tuned! 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].