Local life competition: Ali clenches his fingers into a fist

Ali not only built a new track, this time it was a high-speed overpass.

On July 2, Ali announced a new round of organizational restructuring. Local Life, AutoNavi and Fliggy formed a new life service section, which was headed by Yu Yongfu.

Since the wholly-owned acquisition of Ele. me in 2018, Ali's local life business section has undergone several business and structural adjustments. In October of that year, Ele. me and Word of Mouth were integrated into a local life service company; in March 2020, Alipay announced that it would be upgraded to the "digital life open platform", and the Alipay app also led to the flow of Ele. me. In July 2020, Ele. I announced a comprehensive upgrade, from a food delivery platform to a life service platform that addresses all the immediate needs of users, focusing on consumers' "economy around them."

In fact, in Ali's territory, Ele. I am no longer just a "takeaway platform". In the 2021 fiscal year and Q4 financial report released by Ali in May of this year, it was once again clearly stated that in the future, it will continue to vigorously build Ele.me as the entrance of local life services.

From the merger of Ele.me's reputation to the integration of local life, AutoNavi, and Fliggy, Ali has put together a bigger picture in the field of life services.

There are various interpretations of this outside. Some people say that this move is aimed at Meituan, while others say that the offense of local life is actually the defense of core e-commerce.

But as far as Ali is concerned, this change is obviously not just for competition. The essence of this integration is actually to integrate AutoNavi, Fliggy and local life based on (LBS) location services to form a new consumption scenario, thereby opening up a new growth curve.

Zhang Yong pointed out in his internal letter, “In the face of an uncertain future, we must boldly assume and carefully verify”, which also confirms that this series of changes represented by the life service sector is not a copy-and-paste model. It is an exploration without any reference.

A

After becoming a business department of Alibaba, Ele. I has frequently attacked local life, intra-city retail and other battlefields. However, judging from the results of the battle with Meituan in the past three years, is it hungry that the market share has receded and retreated? The actual state has always been a defense Not an offensive state.

The match point appeared when Meituan chose Borderless War. In addition to the advantages of take-out and in-store business, Meituan has begun to enter the e-commerce track through the high-frequency consumption portal of take-out, with categories such as supermarkets and supermarkets.

Three years ago, Meituan launched the new retail brand Meituan Flash Sale. Now Tuanhaohuo covers not only the superior categories of food and daily necessities on the takeaway platform but also the traditional categories of e-commerce platforms such as apparel and digital home appliances.

Ele. I is constantly improving the richness of products and services to establish a differentiated advantage. On the one hand, relying on Ali's ecological effect, strengthen the chemical reaction with other businesses. Two years ago, AutoNavi cooperated with Ele.me.com. Users can directly access Ele. I’s store page with one click on AutoNavi. They can enjoy services such as ranking, takeaway, and self-pickup. In March of this year, Eli.me Buying Medicine Service and AutoNavi launched the "Map to Find Medicine", which enhanced the richness of Ele. me’s platform products and services.

In fact, Ele.me’s business has undergone gratifying changes this year. As merchants' choose to operate on multiple platforms has become the norm, Ele. I has achieved a triple increase in the number of merchants and the number of active users and super members. Throughout the 2021 fiscal year, the number of Ele.me merchants increased by more than 30% year-on-year, the number of non-catering registered merchants increased by more than 80% year-on-year, and the annual active consumers increased by 20% year-on-year. At the same time, the number of Ele. me super members also showed strong growth, with a year-on-year growth of about 40% in the past quarter.

At this time, Ali's local life business is facing a strategic opportunity to shift from defense to offense. If a good fight can be fought at this time, it will have overall significance not only for local life but also for Ali as a whole.

B

In the past, Ali involved many localized distribution businesses. In May 2017, Alibaba launched Taoxianda. The main product is home in one hour. The products mainly come from local supermarkets. Before being acquired by Alibaba, Ele. I set up a new retail BU in early 2017; at the end of 2017, Alibaba had 224 It acquired a 36.16% stake in RT-Mart’s parent company, Sun Art Retail, at HK$ billion, and held Sun Art Retail in October last year.

Due to the tradition of business horse racing, at this stage, these capabilities are scattered in various businesses such as Tmall, Taobao, and local life, and have not yet been crushed from five fingers into fists.

In the past few years, Ali has made several adjustments, all aimed at straightening out the relationship between different businesses.

At the end of 2018, Tmall was upgraded to "Big Tmall", including Tmall Business Group, Tmall Supermarket Business Group, and Tmall Import and Export Division. Among them, Tmall Supermarket was upgraded to a business group, and together with the Import and Export Department, it directly reported to Zhang Yong.

This is the 1.0 stage of the adjustment of Ali’s local life and intra-city retail business lines. The local life business is completely independent of the local life and intra-city retail incubated by Tao Department. However, the key step in this round of adjustment is the integration of Taoxianda and Tmall. Supermarkets are cut out of Tmall's e-commerce system and are regarded as an independent business entities.

According to latest reports, in mid-April last year, the Tmall supermarket business group was upgraded to the same-city retail business group, and the new retail business of Ele.me, which belongs to Alibaba's local life service company, began to integrate into this business group one after another.

This is the 2.0 stage of the adjustment of Ali's local life and intra-city retail business lines. At this time, except Hema, most of the 1-hour, half-day, and next-day services in the Ali ecosystem have been placed in the same-city retail business group.

The latest adjustment on July 2nd, from the perspective of the alphabet list, there are actually very clear ideas.

Although the intra-city retail business group retains the Taoxianda and local life new retail teams, Li Yonghe continues to be responsible for these two businesses. This means that local life and intra-city retail have merged into a new big team to some extent.

Let's look at the higher level of the entire life service sector, the changes are also obvious.

In the past, adjustments involving local life businesses were nothing more than the merging of similar businesses between Maochao, intra-city retail, and local life. Although the classification methods are different, they are equivalent to permutation and combination on the same plate. This round of adjustment directly expanded the business boundary. Local life, AutoNavi, Fliggy and other life service businesses, wine and travel, and travel businesses have been integrated into the life service sector-the five fingers have finally been clenched into fists.

Obviously, Ali's life service ecology is improving. Last year, an Alibaba insider pointed out in an interview with "Chinese Entrepreneur" that it is not just local life, but Alibaba's intra-city strategy may also be linked with Fliggy, AutoNavi, Hema and other businesses in the future.

These items of life services include import-type products Gaode; high-frequency consumer products, Are you hungry; and transaction-type products. In this way, various businesses can achieve mutual diversion.

Taking a closer look, all businesses of Ali's life service sector, the most notable feature of this sector is that all businesses are open platform-based businesses based on LBS. Ele.me, Gaode, Fliggy, and even Taoxianda, which is still in charge of Li Yonghe, are essentially platform businesses.

At present, AutoNavi has the first market share, Ele. I has the second market share, and Fliggy has the third market share. This integration undoubtedly hopes that these three platform businesses can form a "1+1+1>3" effect. In particular, AutoNavi, as a national-level application other than Taobao and Alipay, is more likely to have greater chemical reactions with Fliggy and Ele.me.

On the other hand, the Tmall supermarket business merged with the Tmall import and export business group. Although the main products of Maochao and the import and export business are different, the business model is mainly self-operated. The integration of self-operated businesses in the large e-commerce sector reflects that Ali, which started with a platform model, is also using self-operated businesses as a key source of multi-engine growth.

C

Compared with the past, the scope of this round of organizational adjustments is much larger, and this can be seen from the personnel changes alone. According to latest reports, at the Alibaba Organization Conference held last month, there were 7 executive photos published on the Alibaba intranet, and Yu Yongfu was among them.

It can be said that the result of the adjustment means that Ali has found a balance between merging similar items and setting up an independent army to respond flexibly.

In addition to specific adjustments such as the unification and integration of life service businesses, another key point mentioned by Zhang Yong in his internal letter is the construction of agile organizations, which is exactly the top-level design that Ali is currently advancing.

"Faced with a rapidly changing and highly competitive market, our organization must become more agile. The construction of an agile organization must start from the top of the group." "We must face customer needs and industry characteristics, and form an operating responsibility system for each business unit. "Basic sector governance model", these are exactly Zhang Yong's description of agile organization construction.

Since last year, Ali has made frequent organizational actions.

Let’s first look at the Tao system. Last year, Jiang Fan was in charge of the Tao system as a whole and formed three very clear lines. Tang Xing was responsible for C-side products and technologies, Yang Guang was responsible for B-side business and industry operations, and Liu Bo (Hua Ming Jia Luo) Responsible for the three major businesses of commercialization.

From the group level, Ali asked the president to be in charge of the B-side business on behalf of the group to strengthen the coordination of different B-side businesses. And now Yu Yongfu, who is dispatched at the partner level, is responsible for the life service sector and has also implemented unified thinking.

The core feature of an agile organization is "clear powers and responsibilities." Only when the business is properly integrated can the executives responsible for the corresponding business take up the corresponding responsibilities. Only in this way can an effective large corps combat mechanism be formed and business flexibility can be enhanced.

In any case, through this round of organizational structure upgrades, Ali is opening up a new track of life services that transcend homogeneous competition. In this situation, the local life business has obtained unprecedented favorable conditions. Facing the reality that some businesses are still lagging behind others, it is conceivable that the offensive in integration will become the main theme of Ali's life service sector in the future.