The Zhitong Finance App learned that on November 21, Alibaba Group (09988, BABA.US) CEO Wu Yongming issued an email announcing the establishment of an Alibaba e-commerce business group, headed by Jiang Fan, and directly reported to Wu Yongming. According to reports, the new e-commerce business group will fully integrate e-commerce businesses such as Taobao Tmall Group, the International Digital Commerce Group, and 1688 and Xianyu to form a business cluster covering the entire domestic and foreign industry chain.

In the email, Wu Yongming mentioned that the times are progressing, and the e-commerce industry is facing tests of global supply chain capabilities, contract fulfillment capabilities, and consumer service capabilities. These factors will determine the future competitive landscape. He also said, “By integrating all e-commerce resources within the Group, we will stimulate the ability that has been built up over the years, serve domestic and global consumers well, and help more small and medium-sized enterprises simultaneously expand domestic and overseas markets.”

According to reports, the establishment of a new e-commerce business group this time is Wu Yongming's new thoughts and actions on how to make good use of both domestic and international resources in the e-commerce field in the future to form joint development efforts. Industry insiders pointed out that this change continues to focus on the main business, and also reflects Wu Yongming's important judgment on the future of e-commerce.

In September of last year, Wu Yongming became the CEO of Ali Group. He clarified the strategic focus of “customer first, AI-driven”, focused on core business, and also served as CEO of Taotian Group and Cloud Intelligence Group, promoted the rejuvenation of the management team, and carried out drastic reforms in organizational formation and business strategy.

Over the past year, Taobao, Tmall, and overseas e-commerce have gradually integrated and opened up. Taobao and the more than 10 million SME merchants behind 1688 have formed a core supply advantage for Alibaba's e-commerce to enter overseas markets.

A week ago, Alibaba announced its financial report for the third quarter of 2024. It achieved revenue of 236.503 billion yuan for the quarter, slightly lower than market expectations of 239.43 billion yuan, an increase of 5% year on year. Under non-GAAP, Alibaba's net profit was 36.518 billion yuan, down 9% year on year. Adjusted EBITA (profit before interest and tax) fell 5% year over year to 40.561 billion yuan. With regard to the “increase in revenue without an increase in profit,” Alibaba attributed this to increased investment in e-commerce business.

Furthermore, in the past two years, many cross-border e-commerce platforms, including Alibaba International, have relied on strong domestic manufacturing capabilities, supply chains, and logistics infrastructure to rise to prominence overseas with multiple models, and have accumulated mature infrastructure and user operation capabilities in overseas markets.

Attachment: Wu Yongming's internal letter “Integrating e-commerce at home and abroad, increasing AI investment, and focusing on strategic direction”

Dear Ali people,

Over the past year, Ali has adhered to the “user first, AI-driven” strategy, reshaped business priorities, and promoted various changes in an orderly manner, and maintained healthy growth in all business segments. The times are progressing rapidly, and Alibaba, 25, must continue to innovate with an entrepreneurial mentality to carry out its mission of serving small and medium-sized enterprises and continue to create value for society.

Standing at a new starting point, the group decided to establish the Alibaba e-commerce business group, appoint Jiang Fan as CEO, and report to me. The e-commerce business group will fully integrate Taobao Tmall Group, the International Digital Commerce Group, and e-commerce businesses such as 1688 and Xianyu to form a business cluster covering the entire domestic and foreign industry chain.

E-commerce in China and the world are entering a new era. Globalized supply chain capabilities, contract fulfillment capabilities, and consumer service capabilities will determine the future competitive landscape. By integrating all e-commerce resources within the group, the Alibaba e-commerce business group will stimulate the ability accumulated over many years, serve domestic and global consumers well, and help more small and medium-sized enterprises simultaneously expand domestic and overseas markets.

E-commerce business and AI technology are the Group's most critical development directions. On the AI side, we will continue to increase investment, promote the AI-powered productivity revolution, improve AI infrastructure and supporting support systems, insist on open source openness, continue to invest in AI product research and development in the ToB and ToC fields, and seize opportunities in the AI era.

At the same time, in order to ensure support and guarantee for the core strategic direction, the financial line and legal line will be managed uniformly by the group. Financial and legal leaders from each business segment reported directly to Group Chief Financial Officer Xu Hong and Group Chief Legal Officer Yu Siying respectively.

The above decision takes effect immediately.

Alibaba Group CEO Wu Yongming

November 21, 2024