The article delves into Alibaba’s latest initiatives in business integration and strategic adjustments, particularly the motivations and implications behind the merger of Ele.me and Fliggy into Alibaba’s e-commerce business group, as well as Jiang Fan’s key role in it.
Just like the unspoken rule of the game “Romance of the Three Kingdoms Strategic Edition”: Thirty draws must be guaranteed, and Jiang Fan finally collected all the fragments of Ele.me.
On June 23, Alibaba Group CEO Wu Yongming announced that from now on, Ele.me and Fliggy will merge into Alibaba’s China e-commerce business group.
After this integration, Fan Yu, who continues to serve as chairman and CEO of Ele.me, and Fliggy CEO Nan Tian will closely unite around Jiang Fan, and while the corporatized management model remains unchanged, the business will be unified with the e-commerce business group.
As a result, the list of people who need to report to Jiang Fan, who is in charge of Alibaba’s big e-commerce, has been lengthened again, and at this point, Jiang Fan has also become the core representative of Alibaba’s real power faction.
“This is our strategic upgrade from an e-commerce platform to a large consumer platform. In the future, we will optimize and integrate business models and organizational forms from the perspective of users to create a richer and higher-quality life consumption experience for users. Wu Yongming said in the email to all employees.
Historically, when a strong enough empire that has existed for a long time begins to take the initiative to carry out large-scale integration and change from within, there are often one reason or another –
It may be a sudden change in the competitive situation, and it is difficult to deal with an increasingly powerful enemy due to the relatively free and loose organization in the past, coupled with the piecemeal fights that do not work together.
It may also be that the small-scale pilot work has achieved phased results, so the latecomer advantage has also found a good opportunity for larger-scale verification.
It is also possible that under the previous attempts at decentralized, scattered, and unconcentrated governance, the huge empire was once difficult to consistent, and thus swallowed a bitter failure. The profound lesson is vividly remembered, and at this time, the new generation of helmsmen is no longer allowed to follow the old path.
But no matter what the changes and reasons, almost all the purposes of change and integration are essentially to continue the glory.
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However, time may also be on the opposite side of friends: when the situation becomes more and more urgent, sometimes change often ends in one battle, integration requires heroes, but the existence of heroes is often a product of helplessness in a compromise situation.
1. Liu Qiangdong gave Jiang Fan some inspiration
In the past few years, it may be subjective adjustment or objective pressure, and Ele.me, which was acquired and continued to be unprofitable for many years, has a tendency to fragment in the competition in the food delivery industry or at the internal strategic level.
In addition to the financial pressure caused by the operating level, the constraints of Ele.me’s development over the past few years may also stem from the swing in internal integration: after 2018, Alibaba merged Ele.me with word-of-mouth to form a local life service company in one fell swoop, and then in 2021, the local life business merged with AutoNavi and Fliggy into the life service sector.
But after the vast majority of integration and adjustment, Ele.me, which has always been an independent business, is basically outside Alibaba’s core e-commerce business.
So by 2025, the scattered businesses will be gradually merged, uniform, and finally in sync, and the strength will be returned to e-commerce, which has become a major focus of Jiang Fan’s work: in the past few months, Taobao flash sale and Ele.me have become important pilot units for Alibaba’s instant retail and integration, and the pioneering and exemplary role is indeed good.
At the beginning of May this year, the Taobao flash sale, which was officially launched less than a month ago, had a daily order volume of more than 40 million.
By June 23, the joint results of Ele.me and Taobao flash sales were refreshed again, and the number of daily orders had exceeded 60 million. Moreover, from the perspective of order structure, flash sales have been greatly expanded to all categories, and are no longer limited to relying on subsidies to drive the tea carnival of the “wool” party.
As a result, the business potential shown by Taobao flash sale in collaboration with Ele.me has allowed Alibaba to taste the sweetness of integration. This is a rare growth and a partial strategic success. This marks that the small-scale pilot work has achieved phased results, and as a result, large-scale business integration has been rolled out and naturally.
In recent years, the boundaries of e-commerce have been greatly blurred, and the fixed consumption scenarios of e-commerce in the past have become full-chain transactions. With the deepening of competition, after the integration of Ele.me this time, the high frequency drove the low frequency, which also made the past Tmall 618, the number of platform purchase users achieve double-digit growth, and the GMV after Tmall excluded refunds increased by 10% year-on-year during the cycle.
From another point of view, the premise of the above integration may also have a sideline and prudence.
Before the launch of Taobao flash sales, JD.com became a reference for Ali to cross the river. In February this year, JD.com’s takeaway was launched in a high-profile manner, and instant retail started to the yellow and blue camps. By June, JD.com’s takeaway order volume exceeded 25 million. Under the exponential growth, the strategy of high-frequency takeaway to drive the low frequency of e-commerce apps has also achieved phased success.
On this basis, the successful experience of JD.com’s takeaway side burning money subsidies to obtain traffic and being compensated on the traditional e-commerce side has also become a major practice sample of Alibaba’s comprehensive inspection before the integration of e-commerce to a certain extent.
The success or failure of instant retail is a big matter, which also makes Jiang Fan, who has just returned to the center of the stage, and Taotian under his leadership have a little extenuating caution.
As a result, in the tactical actions of Taobao flash sale and Ele.me and joint operations, it is inevitable to move closer to the opponent to a certain extent: two months after the launch of JD.com’s takeaway, Taotian’s “hourly delivery” was upgraded to “Taobao flash sale” and displayed at the first-level entrance on the homepage of the Taobao APP. Subsequently, the “Taobao Flash Sale” and Ele.me increased subsidies, and Ele.me’s supply was fully open to the “Taobao Flash Sale”.
In the following period, coupled with the “Hunger Supplement of More than 10 Billion” promotion activities, as well as Ele.me’s business scope benchmarking against opponents and expanding step by step, Alibaba took a new step in the integration of e-commerce near and far. During this period, Meituan, Ele.me, and JD.com also set off a “homophonic stalk” color war, turning the publicity caliber into another form of mutual tribute.
Although this instant retail war launched by Jiang Fan in charge of the field of large e-commerce has already achieved certain results, from another point of view, various adjustment actions, including this integration, also have passive follow-up to learn from opponents: for example, at the customer acquisition level, Ele.me’s “hunger subsidy of more than 10 billion” is opposite to JD.com’s 10 billion subsidies, and once again falls into the traditional plot of subsidies to open the way.
Under the dilemma, after JD.com achieved phased success in driving e-commerce growth with high-frequency daily activity of takeaway, Ali couldn’t learn it, and on the other hand, Meituan flash sale began to hit Taotian’s basic market again, and it couldn’t do it without fighting.
As a result, the predecessors broke through first, and Alibaba followed: from this point of view, including Taotian and Ele.me’s recent counterattack, as well as this seemingly radical business integration, may be the continuation of Alibaba’s e-commerce strategy to guide the situation and follow the opponent’s actions.
It is worth noting that with the recent merger of Fliggy into the field of Alibaba’s big e-commerce, the experience gained by Ele.me and Taobao flash sale business pilots and the inspiration gained from opponents may also be gradually diverging to Alibaba’s wine and tourism field.
Earlier, JD.com had already reported the news of entering the wine tourism, and Liu Qiangdong’s subsequent more distinct statements, on June 18, JD.com issued an “Open Letter to All Hoteliers”, officially announcing its entry into the wine and tourism market.
In fact, as a highly profitable wine hotel in local life, it has a great temptation for the yellow, blue and red armies: although Meituan’s latest financial report did not separately disclose the profit margin of the hotel hotel tourism business, the industry generally speculates that the operating profit margin of the hotel tourism business can exceed 30%.
From this point of view, Fliggy, which is already an industry veteran, has recently been included in Alibaba’s e-commerce territory, which is not only the logic of high-frequency (takeaway) driving low-frequency (wine tourism), but also the reason for profit demand, and perhaps a continuation of imitation.
2. Make Alibaba Great Again!
In addition to the consideration of the competitive dimension, Alibaba e-commerce’s in-depth integration of Ele.me and Fliggy can be regarded as the deepening of Alibaba Group CEO Wu Yongming’s “cutting the domain and leveling the valley” movement.
This almost once again confirms that when competition can no longer rely on loose organizations and business piecemeal to deal with increasingly powerful enemies in the industry, the mindset of concentrating on doing big things is still outdated.
Perhaps fed up with the dispersion and wandering, on the evening of May 8, after Alibaba fully opened up the authority of the internal forum, employees from various business units, including Cainiao, DingTalk, Ele.me, etc., posted to commemorate this historic moment: “Make Alibaba Great Again!” ”
On the same day, Wu Yongming also released an internal letter, emphasizing that there is no “conservative” in Alibaba’s genes, only “creation”. Such an offensive tone is also in contrast to the emphasis on family harmony and brotherly respect on Alibaba Day in previous years.
The urgency of the form and arduous tasks will inevitably reduce the space for the mediation of the helmsman of the giant ship, and at the same time, it is bound to increase the intensity of rectifying the chaos of the past.
Now, when Ele.me and Fliggy integrate the e-commerce sector, it also indicates to a certain extent that the “1+6+N” spin-off strategy has come to an end. From this point of view, if the integration work requires a lot of effort but never stops, it is enough to see how significant the sequelae of “division” in the past are.
To some extent, Ali has been like a Mongolian Empire with an expanding territory in the past few years, which is too vast, so it has to carry out a large-scale institutional experiment.
In 2023, Daniel Zhang, then the “number one” of Alibaba Group, launched Alibaba’s “most important organizational change”, splitting Alibaba into a “1+6+N” structure. Although this drastic change had some effect in the early stages, it promoted the synergy between Alibaba’s e-commerce platform Lazada and AliExpress, Trendyol, etc., resulting in a year-on-year increase of 41% in Alibaba International Digital Business Group’s revenue in 2023.
From the perspective of the overall effect, after the spin-off, the business forces were dispersed, cross-departmental collaboration became difficult, and even the situation of silos broke out simultaneously: this year, when Taotian wanted to promote the “hourly delivery” business, it needed to call Ele.me’s instant delivery network, but found that the interface protocol needed to be renegotiated; Moreover, Alibaba Entertainment Group pays an annual fee 15% higher than that of external customers for the purchase of Alibaba Cloud services.
The various conflicts caused by the above “enfeoffment” almost reached their peak at the end of 2024: especially when Pinduoduo’s market value once surpassed Alibaba, Alibaba’s intranet “What the Hell Did We Tear Down” triggered many follow-up posts.
At that time, an employee said: It’s like cutting an octopus into six pieces, each section feels like an independent creature, but the nervous system is still at headquarters.
Therefore, in 2023, which is full of changes, under the effect of the common internal and external situation, integration and change are imperative. After the storm, at the end of 2023, after only two years at the helm of Taotian, Dai Shan handed over her authority under various pressures.
With Wu Yongming and Jiang Fan re-entering the center of Alibaba’s power stage, the pressure release problem caused by the “enfeoffment” caused by the separation of wars and competition has finally been rectified in a large number of high-level personnel changes and business reintegration.
As a result, focus and integration have become the main theme of this company again. After becoming the new helmsman of Alibaba, Wu Yongming mentioned in many speeches that he wanted to “awaken Alibaba’s entrepreneurial mentality”, “invest more resolutely, make more decisive trade-offs, and have a more flexible governance mechanism”, and “must turn the page to zero” in the past.
Jack Ma also declared internally: “The methodology that Alibaba relied on to succeed in the past may not be applicable.” In the face of a more severe competitive environment, Jack Ma believes that the next step is Taobao, not Tmall’s opportunity, and proposed that Taotian should “return to users, return to Taobao, and return to the Internet”.
It is also in this context that Wu Yongming, as a firm executor of Jack Ma’s strategy and one of the Eighteen Arhats, has begun to rise in strength and frequency: in the past two years, he has adjusted several times, and in 2025, he will further announce that he will invest 380 billion yuan in AI in the next three years, and focus on winning key battles.
As a result, the two core directions of “e-commerce + AI” are finally clear.
3. Jiang Fan’s eternal firefighting captain?
Over the years, Alibaba has invested on a large scale in retail, logistics, finance, life services, culture and entertainment and other fields.
Looking at the current financial report of Alibaba, it is not difficult to see that Alibaba is still really supporting e-commerce, and it will take time for the cloud business to drive the second growth of performance. Moreover, in the past, the vast majority of Alibaba’s business spent a lot of money was no longer a plus for performance.
The above is also showing at the same time, including this integration, and even the vigorous changes of Alibaba in the past, it still takes a long time and sufficient patience to be truly effective.
The good news is that from strategic expansion to strategic contraction, and then to the current focus on the deep changes of “AI + e-commerce”, in the critical period of Alibaba’s overall transition, Taotian strongman Jiang Fan has returned, and there is no doubt that he has once again become the firefighting captain.
At the end of 2024, Wu Yongming, CEO of Alibaba Group, announced the establishment of Alibaba E-commerce Business Group, and after appointing Jiang Fan to be in charge, now, this huge e-commerce business group that fully integrates Taobao Tmall Group, International Digital Business Group, 1688, Xianyu and other e-commerce businesses, with the merger of Ele.me and Fliggy into the territory, its power has grown again.
But for Jiang Fan, the more and more huge business also means more and more pressure: Jiang Fan, who has returned, after Alibaba e-commerce has achieved great unification, the first priority of his operation is growth, but at present, it is not easy to maintain the status quo.
Moreover, with the intensification of competition in the industry, Alibaba e-commerce needs to spend more to maintain the status quo and stabilize profits, not to mention, in the more uncertain instant retail battlefield, the current competition situation is still not clear to Ele.me.
Moreover, a question worth pondering is: why did Jiang Fan still be the hope of the whole village after a few years of leaving and returning?
In the complex competitive landscape, if the group wants to completely achieve a long and critical transition, business contraction is inevitable, and power concentration is also imperative:
Therefore, heroes must appear, heroes must be able to fight, heroes must win, but heroes are also a kind of shackles.
