Alibaba's Tmall and Taobao are joining forces in back-end operations, as competition sweeps across the Chinese e-commerce market.
In a statement from Trudy Shan Dai, the newly named Head of Digital Commerce at Alibaba, the back-end operations will be reorganised. This includes the development of three new operation centres for both Tmall and Taobao, which have historically been kept separate. The focus for these centres will focus on platform strategies, user expansion and industrial development for merchants.
For more than ten years, the two businesses have operated as independent units. However, this new development, which will come into effect immediately, is expected to sharpen UX and ‘mechanism innovation’ for the two platforms.
Taobao and Tmall own a large stake in the global e-commerce market, 15 and 14 percent, respectively. In comparison, Alibaba has a 29 percent market share. The Chinese e-commerce market is the largest in the world and has rapidly grown in the last couple of years, driven primarily by the pandemic. A report from Statista shows that there are more than 950 million Chinese consumers who purchase on digital platforms and more than 250 million international consumers.
The two businesses, Tmall and Taobao, are different in nature. Importantly, Tmall operates as a B2C platform, whereas Taobao is primarily C2C, with products generally listed at cheaper prices than the former platform.
Could this new plan of unifying the two e-commerce businesses, Tmall and Taobao, be the answer to helping smaller retailers in an enormous landscape?
Alibaba Group underperformed in its FY results, released in November 2021. The e-commerce giant did not quite hit its expected target, its shares subsequently dropping 11 percent. “This quarter, Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future,” said Daniel Zhang, Chairman and CEO of Alibaba Group.
The business recorded revenue growth of 29 percent YoY to USD$31.147 million. According to Maggie Wu, the CFO at Alibaba Group, this was driven by the ‘performance of [its] diversified businesses’. “During this quarter, our continued investments in key strategic areas have resulted in robust growth for these young businesses,” she said.
It has been an interesting year for Alibaba Group, which has been involved in some controversies, such as facing a huge antitrust fine. In 2021, Alibaba was recently fined $3.7 billion ‘abusing its dominant position’ and limiting competition to other retailers in the country.
More recently Taobao’s most famous live stream influencer – also known as KOLs (Key Opinion Leaders) – Huang Wei, A.K.A Viya – was taken off the platform after she was fined Rmb1.34bn ($290 million) by the tax office of the city of Hangzhou for underreporting her income.
Livestream shopping is one of the most influential marketing strategies used by Alibaba Group, and is “even more popular than before,” said Maggie Zhou, MD of Alibaba Group ANZ in 2020. The live stream market was estimated to hit $300 billion in 2021, a 335 percent increase from 2019. Some of the most famous KOLs, such as Viya, have reported selling more than 12 products an hour.
The news of Viya’s departure could be a major blow for Taobao. “Taobao has just lost its core competitiveness in livestream e-commerce,” said Li Chengdong, the CEO of e-commerce think-tank Haitun. “Livestreaming represents the future of e-commerce and Taobao risks being taken over by Douyin and Kuaishou.”
The e-commerce landscape is changing. With a Power Retail Switched On membership, you get access to current e-commerce revenue and forecasting, traffic levels, average conversion rate, payment preferences and more!