After a series of drastic changes in its organizational structure, Alibaba seems to be regaining its rhythm. From the spin-off of “1+6+N” to the refocus on core business, what kind of logic is hidden behind Alibaba’s strategic adjustment? This article will provide an in-depth analysis of Alibaba’s organizational transformation process in the past two years, explore its strategic layout in key areas such as e-commerce, instant retail and AI, and how to regain combat effectiveness by integrating resources.
Two years have passed since the huge “1+6+N” change, and Alibaba has finally regained its sense through “takeaway”.
During the May Day period, Taobao’s “flash sale”, which was only launched for 6 days, announced that the single-day takeaway order exceeded 10 million. This achievement is not inferior to JD.com, and it also allows Ele.me, which has been suppressed by Meituan for many years, to “see the light of day”. The success of the first battle of the “flash sale” is not so much the initiative of the marginalized local life business to participate in the war, but rather as a small test of Alibaba’s resumption of business expansion.
This layer of window paper was pierced the day before Alibaba. On May 9, Wu Yongming, CEO of Alibaba Group, posted on the intranet forum, and then Alibaba will focus on several core battles with a saturated investment style. Alibaba will formulate a synergistic strategy for each business of the group with the optimal global value.
This almost announces that Alibaba will return to “one Alibaba” from the “1+6+N” that was spun off two years ago. After all, Jack Ma said that if the strategy is adjusted and the organization is not adjusted, it is equivalent to no strategy.
01 From a violent spin-off to a compound, what has Ali experienced in the past two years?
On March 28, 2023, with a letter from then-CEO Daniel Zhang, Alibaba officially announced the launch of the “1+6+N” organizational change. That is, under Alibaba Group, six major business groups and a number of business companies have been established, including Cloud Intelligence, Taobao Tmall Commerce, Local Life, International Digital Commerce, Cainiao, and Dawen Entertainment, and each business group is responsible for the overall operating results.
In the two years before that, there was anti-monopoly rectification pressure internally, and Alibaba entered a rare period of gray in history. As the leader of Chinese concept stocks, Alibaba’s market value has shrunk by two-thirds in 16 months. Looking back, the Internet industry encountered structural challenges, and spin-off may have been the best choice at that time. At that time, some experts analyzed that if a company of this size wants to enter a new stage of development, it needs to redivide its interests in order to achieve a boundary breakthrough.
Ideally, the business companies will also gain higher valuations and market share after the spin-off.
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However, it cannot be ignored that this spin-off is not driven by business growth or innovation, but a capital market-oriented change.
Two months after the start of the change, Alibaba announced a complete split of Alibaba Cloud, and Hema will wait for an opportunity to go public. Half a year later, Hema announced that it would suspend its listing, Alibaba Cloud would suspend the complete spin-off, and Wu Yongming would succeed Daniel Zhang as the new CEO of Alibaba. In a report by the Financial Times about Alibaba’s spin-off at the end of last year, Daniel Zhang’s departure from Alibaba Cloud was interpreted as the first sign of the collapse of the spin-off plan.
“Latepost” commented on this that year: a company with a market capitalization of 100 billion dollars announced such a drastic split and restructuring plan, and due to changes in the actual situation, it was readjusted in less than half a year, which is rare in the world. In response to this spin-off, some employees complained on social networks, saying that the reason for Alibaba’s decline in recent years was the arrogance of Pinduoduo and other competitors and the swing of strategy. As a front-line employee, he can also feel the frequent adjustment of the organizational structure, which makes him feel different from Alibaba in the past.
It can be seen that even Alibaba, which is known for its organizational skills, seems to be at a loss and confused at a major turning point in the company.
In fact, nearly two years after announcing the spin-off of the six businesses, much of the plan has been canceled or suspended by Alibaba Group CEO Wu Yongming and Board Chairman Cai Chongxin.
In September 2024, the group integrated Taobao Tmall Group, International Digital Business Group, 1688, Xianyu, etc. into Alibaba’s e-commerce business group, and appointed Jiang Fan as CEO. “1+6+N” exists in name only.
But legacy issues in the organizational structure remain. Some Alibaba employees reported that the company’s intranet is isolated, and the flow of talents between many business lines is hindered, and other business groups need to leave first, and then go through the manpower interview process to apply for onboarding. However, the past years of work will be cleared.
02 Several core battles: instant retail, e-commerce and AI
At present, “one Ali” is mentioned again, in Wu Yongming’s words, because there are several core battles to be fought. Ali has come to the moment to clench his fists and attack, and he needs to gather resources. Judging from recent high-level statements and business actions, these core battles should refer to e-commerce, AI and instant retail.
Let’s take a look at the e-commerce sector first. E-commerce has always been Alibaba’s basic market, but in the past few years it has been shaky. A key node is that in 2020, Pinduoduo surpassed Alibaba in terms of the number of active buyers. By November 28, 2023, Pinduoduo’s stock price soared after the Q3 earnings report, almost tying Alibaba, and Alibaba employees posted on the intranet, “I was really shocked, that inconspicuous slash was almost a big brother.” Since then, Jack Ma has rarely appeared in the comment area, replying “I firmly believe that Alibaba will change, and Alibaba will change”.
▲ Jack Ma replied to employee posts on the Alibaba intranet
Needless to say, the competitive pressure faced by Taobao and Tmall is not to be said. From 2022 to the first half of 2024, in the process of low prices and refunds in the whole industry, it is difficult for Taotian to be alone. In terms of direction, Jack Ma proposed to “return to Taobao”. In the second half of 2024, the disorderly competition in the industry is coming to an end, and Tmall Taobao is gradually pulling back to its own rhythm.
When the growth rate of the core e-commerce business slowed down, Jiang Fan was ordered to take over Alibaba’s overseas digital business sector. He resisted the pressure and in just three years, he built Alibaba’s overseas business into its highest-growing business.
After Jiang Fan took office, he integrated all the cross-border businesses of Taotian Overseas, Lazada and AliExpress into the unified management of AliExpress. At that time, Alibaba’s overseas business accounted for a very low proportion of the group’s revenue, and by the end of 2022, the overseas business began to maintain double-digit growth for many consecutive quarters.
In 2023, the overseas digital business sector was officially established as Alibaba International Digital Business Group. It is one of the six business groups in the “1+6+N”. In the same year, Jiang Fan took AliExpress and Lazada as the main attackers to promote the implementation of cross-border + local models with a cost-effective model. In 2023, AliExpress’s market share will continue to expand, and it will become the four tigers of China’s e-commerce going overseas along with Temu, SHEIN and TikTok.
In the latest annual report, the sector’s revenue increased by 32% year-on-year to 37.7 billion yuan, and AliExpress Choice orders accounted for 70%. E-commerce and Alibaba are both prosperous and lost. And at this time, the only one who can win the battle is Jiang Fan. Not surprisingly, in September 2024, Alibaba’s lifeline and Taobao Tmall’s scepter were handed over to Jiang Fan again.
At this time, the profit path of international e-commerce has been relatively clear, and one of Jiang Fan’s important tasks is to lead Taobao and Tmall back to the stable growth range. When mainstream e-commerce platforms have shifted from the extreme of “rolling merchants” to reducing the burden on merchants and pursuing a good business environment, this is a good time for Taobao and Tmall to return to their original intention and “be themselves”.
Judging from a series of actions this year, while “returning to Taobao”, Jiang Fan is also readjust the Tmall strategy, leveraging merchants to invest more resources in the Taobao system by increasing real money incentives, digging deep into traffic inside and outside the station, and improving member rights.
The second battle is in the instant retail sector. Here Alibaba should thank JD.com. JD.com’s high takeaway and the idea of driving instant retail (entering e-commerce) through takeaway must have inspired Alibaba. Of course, if Ali doesn’t make a move, Ele.me may really become a dead move.
Alibaba’s instant retail business was previously scattered across different business lines such as Taobao, Ele.me, and Hema. On April 30, Taobao Tmall’s instant retail business “Hourly Delivery” was upgraded to “Taobao Flash Sale”. On the same day, Ele.me officially announced the official launch of “Hunger Supplement of More than 10 Billion”. Judging from the prices of various tea drinks posted by netizens, Ele.me’s round of subsidies is not inferior to JD.com.
▲ The takeaway price of each tea drink has dropped to single digits in this subsidy
With subsidies and the blessing of Taobao homepage traffic, Ele.me’s order volume quickly caught up with JD.com. On May 5, Ele.me officially announced that its single-day takeaway orders from Taobao flash sales had exceeded 10 million. Previously, Ele.me’s annual orders were only around 20 million. This undoubtedly injected a boost into Ele.me, which has always been marginalized. In July 2021, based on geographical location, AutoNavi, Local Life (Ele.me & Word-of-mouth), and Fliggy formed the life service sector. It is managed by AutoNavi CEO Yu Yongfu. Although local students were active during Yu Yongfu’s period, they always seemed to be off the beaten path.
▲ Word-of-mouth was once the representative of Alibaba’s local life section
In the past three years, Ele.me’s losses have shrunk year by year, and AutoNavi’s market share has continued to increase, but it cannot hide its embarrassing positioning within the group. Today, Ele.me has completely integrated into Taobao flash sales, opening up the traffic and operations of the two companies. In addition to Ele.me, through flash sales, Alibaba Tmall half-day front warehouse, Hema, etc. can be unified into the same entrance, this kind of play with high frequency to drive low frequency is naturally suitable for traffic hungry Alibaba.
Ele.me’s rapidly growing order volume also proves that instant delivery is only an extension of Alibaba’s inherent main business, and the threshold for attack may not be high for Alibaba. This is the way out for Ele.me and one of the biggest growth opportunities that Taotian can see at present.
Compared with JD.com and Meituan, Alibaba’s cash flow is obviously much more abundant. This also means that Taobao flash sales should withstand long-term losses.
Instant retail is a typical key battle that requires the participation of multiple business parties to give full play to their respective advantages and strengths. In the previous self-financing stage, Ele.me’s goal was to reduce losses, so naturally it had no intention of fighting, and probably could not pay tens of billions of subsidies. Only by going to “one Alibaba” can we coordinate various business lines to cooperate with each other for long-term value.
The third core battle is cloud and AI.
In November 2023, six months after announcing that it would go public independently, Alibaba announced its decision to terminate the Alibaba Cloud spin-off. When it was decided to cancel the cloud business spin-off plan, Alibaba’s stock price suffered a heavy blow. It was originally thought that the split would create more value increment for shareholders, but the cancellation of the IPO plan panicked the market.
Previously, some analysts said that returning to Alibaba Group is the most beneficial choice for Alibaba Cloud at this stage. Because it is foreseeable that the cloud computing business will maintain high capital investment for a considerable period of time.
Looking at the next decade, AI is undoubtedly the most certain opportunity. Different from Tencent and Byte’s calmness in the field of AI, AI and cloud are also Alibaba’s new tickets.
But this ferry ticket is expensive. Previously, the Wall Street Journal reported that although Microsoft’s large model GitHub Copilot costs $10 per month, Microsoft has reverted more than $20 per user per month on average. It can be seen that in this round of AI arms race, throwing money is not only the foundation, but also may not generate considerable profits for a long time.
▲ GitHub Copilot price list
Even for technology giants with rich family backgrounds, AI investment is always a bottomless pit. For Alibaba Cloud, with AI and the group’s backing, there is a steady stream of technology and capital supply. Previously, Wu Yongming promised that the next three years will be the three years with the highest concentration of cloud computing and AI infrastructure in the history of Alibaba Group, with a planned investment of 380 billion, far exceeding the sum of the past ten years.
Looking at a longer dimension, Alibaba Cloud’s demand and computing power space have just been released. After AI resources are opened, it will reduce the duplicate technology investment of various business units and accelerate the development and sharing of underlying technologies of AI and big data.
At present, the layout of Alibaba AI has been basically completed. On the one hand, there are Alibaba Cloud, DingTalk, Qwen models and open source ecology, and on the other hand, there are C-end scenarios such as Taotian and Quark. It can be said that Alibaba is ready for the tough battle of AI from all dimensions.
In this process, several changes that can be determined are-
With the blessing of AI, DingTalk’s strategic position has been upgraded, commercialization has been temporarily put aside, and AI products have become the highest priority. Wu Yongming previously said that DingTalk, as the group’s most important enterprise-level AI application for ToB, will use AI to reshape intra-enterprise collaboration and collaboration scenarios in the future.
The seemingly unprofitable Qwen open source model has also brought real growth to Alibaba Cloud in the past year. Among Hugging Face’s top 10 global open source models in 2024, all of them are derivative models of Alibaba Qwen. At the same time, Qwen accounts for a quarter of the world’s open source model downloads.
▲ Hugging Face 2024 Global Open Source Model List
On April 29, the Qwen team officially released the latest generation of large language model – Qwen3, which open-source multiple heavyweight models, marking a new stage in the large model ecosystem. The optimism is that these technological breakthroughs are not without landing scenarios. On the B-side, Tongyi Qianwen’s optimized search algorithm increased the click-through rate by 17%, while on the C-side, Quark App’s daily active users exceeded 60 million, and the AI document processing volume increased by 300% month-on-month. In terms of the most intuitive revenue structure, AI-related products have grown by triple digits for six consecutive quarters, accounting for 18% of cloud revenue.
In fact, Jack Ma’s several appearances are not the real reason for Alibaba’s stock price to rise. The gorgeous turn of AI+ cloud is the key to Alibaba’s re-imagination.
▲ On May 9, Jack Ma appeared at Alibaba’s headquarters Source: Social platform
At this moment, Alibaba undoubtedly hopes to use the strength of the whole group to jointly expand the cake of AI. Without traffic control like Tencent, ecological collaboration and internal synergy are Alibaba’s strongest competitiveness. From the perspective of e-commerce, instant retail, and AI war, if the spin-off was unavoidable back then, then integration is also the general trend now.
03 Turn defense into offense and return to an Ali
Alibaba’s rapid response to the takeaway war, Taobao’s defensive counterattack, AI large model rushing to the list, cloud business returning to high growth and a series of achievements show that Alibaba’s combat effectiveness, organizational ability, and execution ability seem to be returning. Since the beginning of this year, Alibaba’s stock price has risen by more than 40%. Driven by the large model, Alibaba Cloud’s revenue growth rate and profit level will continue to rebound in 2024, and the profit margin will reach the highest level in history.
▲ Alibaba’s stock price has continued to climb since 2024
The fly in the ointment is that although the stock price and performance have returned to a three-year high, it is foreseeable that the pain of organizational change will continue. For example, businesses that rely on group resources, such as DingTalk and Cainiao, will benefit significantly, while businesses that rely on independent innovation, such as Hema and Quark, can continue to be autonomous and flexible. In the latest financial report, Taotian’s 26% marketing expenses were only exchanged for low-single-digit GMV growth, the more money was spent, the slower and slower user growth, and the slow recovery of online retail as a whole, the challenges faced by Taotian were still very large.
The era of high growth is a thing of the past, and how to achieve stable growth in the refined operation of the stock should be Jiang Fan’s strength. In terms of AI, if we really want to verify the level of AI implementation and the collaborative results of various departments, 2025 may be a watershed.
“All great companies are born in winter. The era of AI e-commerce has just begun, and it is an opportunity and a challenge for everyone.” In that speech in April this year, Jack Ma had already predicted everything in advance – after all, for giants like Alibaba, it may not be as easy to turn around as a startup.
