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Source: Visual China

In early July, Cheng Daofang changed from the head of Taobao Live to the former head of Taobao Live. Such a series of job changes in a short period of time is rare even for Alibaba, which has launched the "biggest reform in history" many times in the past year.

At a recent meeting of core executives, Alibaba's management team sent a signal that all business lines must have "business awareness." Alibaba insider Deng Gang revealed to Shenzhen Net, "This means that the group will make trade-offs in its core e-commerce business, and some businesses that perform poorly in terms of profit margins will be affected."

Taobao just revised its pricing strategy not long ago. At a closed-door meeting with many Taobao frontline business executives after the 618 shopping festival this year, it was reported that Taobao will weaken its absolute low-price strategy in the future and change the "five-star price power" distribution system from last year back to distribution based on GMV.

Obviously, just as the theme of Cai Chongxin's letter to all employees last year was "The only constant is change", Alibaba is still in the midst of organizational and personnel changes as well as strategic changes brought about by personnel changes.

It is worth noting that as Alibaba's first-generation leader Jack Ma, second-generation leader Zhang Yong and the relevant management team built around the two core leaders have successively left their management positions, this e-commerce giant, which was originally considered to be the Chinese Internet company with the most prevalent underworld culture and mountain culture, is becoming more and more like a traditional super company - more realistic, more efficient, and even more ruthless.

The good news is that with the withdrawal of multiple businesses from listing and the separation of some businesses from independent operations to re-integration with Taobao businesses, some decisions made in previous years are being overturned, and the consistency of Alibaba's reforms is becoming stronger.

At the beginning of 2023, the price war in the e-commerce industry suddenly resumed. Liu Qiangdong, who had been in hiding for many years, appeared in China and denounced that "JD.com is losing its low-price mental advantage"; Alibaba split into six, and Dai Shan proposed a five-star price power evaluation system; in the same year's Double Eleven, Taotian Group raised the order volume and DAU to the most important evaluation indicators of all departments.

E-commerce insiders told the author of "Shenwang" that the distribution of traffic on e-commerce platforms, apart from paid purchases, is generally divided into two logics: one is to distribute it simply based on traffic, that is, those with higher order volumes will get more traffic; the second is to take GMV, average order value, etc. into consideration at the same time.

In the first logical system, low price is almost the only criterion for measuring merchants and platforms.

An insider told the author that the five-star price power proposed by Dai Shan is her mature experience in 1688 and Taobao, "but Alibaba's e-commerce system is divided into several levels, facing different users. In the end, Tmall, Taobao, Juhuasuan, and Taobao, the four business lines are all stuck in the quagmire of price lines."

During the 618 shopping festival in 2023, a merchant who opened a dual store on Pinduoduo and Taobao expressed his concerns about the continued price war to the author of Deep Web. "Pinduoduo is just a platform for clearing inventory, but Taobao and Tmall now give too much weight to products with 'price power', which affects the brand image." The merchant further told the author that if the low-price strategy continues, "only a very small number of top stores and no-brand merchants will survive in the market."

A senior employee who has worked at Taobao for more than eight years and rotated through multiple business lines expressed his concerns about price wars to the author of Deep Web: "Low-price luring customers and draining the pond to catch all the fish may achieve rapid growth, but sellers will not like this for long."

More than 20 years of history of China's e-commerce has proved that price wars are often a powerful weapon for followers, while it is difficult for leaders to fight back through price wars. For example, Taobao Special once became the mobile app with the fastest growth in mobile Internet users in 2020, but when the number of users exceeded 100 million, it gradually faded out of consumers' sight due to no further investment.

Taotian Group has not been able to escape this curse. According to Alibaba's financial report, in the third quarter of fiscal year 2024, which covered Double Eleven, Taotian Group's revenue only increased slightly by 2% year-on-year; and in fiscal year 2024, the figure was only 5%.

On November 29 last year, Alibaba’s market value was surpassed by Pinduoduo for the first time; just 20 days later, Wu Yongming replaced Dai Shan and became the new head of Taotian Group.

Deng Gang told Shenzhen Net that after Wu Yongming took over, he had made substantial adjustments to the previous low-price-only strategy. "Rujia Luo (Liu Bo, the head of Alibaba's Tmall division and current head of Taobao Live) quickly disbanded the Everyday Low Price Department."

Wu Mengqi has been observing Alibaba for many years. In his opinion, Taobao should pay more attention to 88VIP users. According to data provided by Alibaba, by the first half of 2024, the number of 88VIP users has exceeded 36 million, and the APRU has exceeded 60,000 yuan, contributing more than a quarter of the GMV for Tmall and Taobao.

Rong Zong, an insider of Taobao Group, told the author that although Tmall and Taobao have given up the low-price strategy, they have not given up the price war. "Taobao Group will still provide sufficient subsidies to platform merchants to maintain its first-mover advantage and absolute scale, and tilt traffic to higher-value goods."

Live broadcast changes its coach: following Taotian’s footsteps

In Rong Zong's view, the core reason behind the change of leadership in Taobao Live is that Taotian's top management is trying to find a way out for Taobao Live under the new situation.

Cheng Daofang took over Taobao Live in September 2021. In the previous year's Double Eleven, Taobao Live delivered an excellent figure of 72.9 billion yuan in GMV, of which Wei Ya and Li Jiaqi alone brought in 22.1 billion yuan. That was an era that left competitors far behind.

However, the relationship between the platform and the super anchors is deteriorating. Shortly after Cheng Daofang took over Taobao Live, L'Oreal had a fierce conflict with the top anchors. In this incident, the platform almost lost its voice.

Someone familiar with Alibaba told the author, "Consumers only recognize Li Jiaqi and Wei Ya, not Tmall, which is a very troublesome thing." Another Alibaba insider expressed dissatisfaction to the author, "They took the group's best traffic support and strategic resources, but all the money they earned went into their own pockets, destroying the group's original industrial chain."

Subsequently, Wei Ya, Xue Li, and Lin Shanshan were fined for tax issues and withdrew from the live broadcast industry; the following year, Li Jiaqi faded out of live broadcasting due to the "Hua Xizi eyebrow pencil" incident.

During the period when Cheng Daofang was in charge of Taobao Live, the transaction scale of Douyin and Kuaishou Live successively surpassed Taobao Live, which had lost its top anchors. Douyin even began to establish an e-commerce closed loop, only supporting Douyin store's own product links.

The internal low-price strategy seized resources, and the external top anchors gradually faded out of the Taobao system. Faced with internal and external troubles, Taobao Live chose to recruit anchors from content platforms such as Douyin, Kuaishou, Bilibili, and Xiaohongshu.

"In the minds of most consumers, low prices equal live streaming, because it is simple, direct and effective. The hawking style of selling represented by Li Jiaqi, Wei Ya, Luo Yonghao and Xiao Yangge has always been the mainstream of the live streaming e-commerce circle." However, Deng Gang emphasized to the author, "In the Alibaba system, Taobao Live has been given too high expectations, and the assessment of Taobao Live has also used DAU as the most important indicator. This has also led to various radical measures in Taobao Live, such as the introduction of a large number of game anchors and show anchors, which have no actual effect on promoting transaction conversion."

In Deng Gang's view, the reason why Taobao Live has changed its leaders repeatedly was that Jia Luo, the head of Tmall, was ultimately directly responsible. "The core is to ensure that we break away from low prices and focus on serving the short-term explosive demand of brands, which is in line with Tmall's 'brand growth'." It is worth noting that among the four Taobao executives under Wu Yongming, only Wu Jia had relevant experience in content operations (UC, Shuqi, etc.), but the person who finally took over the position was Jia Luo, who was better at marketing.

Obviously, Taobao Live is giving up the content e-commerce it once proposed, which is not its main battlefield. According to Kuaishou's latest financial report, its average daily active users and average monthly active users reached 394 million and 697 million, respectively, up 5.2% and 6.6% year-on-year, respectively. The average daily usage time of daily active users is as long as 129.5 minutes.

The continuous changes in Taobao Live's head coach are just a microcosm of Alibaba's constant turmoil in the past year. A senior employee who has worked at Alibaba for more than ten years commented on his life in this year, "Every day is witnessing history, and every second is embracing change."

At the beginning of last year, Alibaba’s then CEO Zhang Yong announced the launch of the “1+6+N” organizational reform, splitting the technology giant into six different business groups that could independently raise funds and go public, thus opening the curtain on a year of turbulent changes.

Zhang Yong resigned as chairman of the Alibaba Group, and later stepped down as group CEO and Alibaba Cloud CEO. At the end of the year, Alibaba announced that it would stop splitting up Alibaba Cloud and suspended the listing plans of Hema Fresh and Cainiao. Also at the end of the year, the position of Taotian Group CEO was transferred from Dai Shan to Wu Yongming.

Beneath the raging waves on the water, more fragmented organizations hidden beneath the water are being broken up and reorganized, groping for the future again.

“I was extremely shocked when I received the news (of Zhang Yong’s resignation),” a former Alibaba Cloud employee told the author. “At first I thought we were the top project, but now the entire team has been disbanded.”

An employee of a business line planning to go public told the author, "We don't know when to start or stop the listing plan. All the information is in the hands of the top management." The employee also revealed that before last year's Double Eleven, there were major problems with the coordination between the department and its sister departments. "Because the sister department gave its core resources to its competitors, the boss slammed the table at a senior management meeting with less than ten people, and the problem was finally solved."

After a year of "fear", the continuous changes in leadership at Taobao Live show that Alibaba's turmoil is far from over. However, the change in leadership at live streaming e-commerce shows that the direction is still clear. At the beginning of this year, Wu Yongming emphasized in an internal letter that "shelf e-commerce is offensive, and content e-commerce is defensive."

Wu Mengqi believes that frequent personnel changes make it difficult for employees to concentrate. For the 25-year-old Alibaba, it is easy to build an empire but difficult to maintain it. "It is not easy to turn the ship around. First of all, we need to unify the pace of change and not let the policy waver."

It is worth noting that Alibaba's power system back then was called one president (Zhang Yong) and four general managers. The current Taobao management team has also formed the same structure. Alimama director Wu Jia, Taobao director Chen Weiye, Tmall director Liu Bo, M2C director Liu Yiman and other four people report directly to Wu Yongming.

The continuous changes in leadership at Taobao Live may indicate that the changes at this giant are far from stopping. Even if there are further personnel adjustments in the future, it will not be surprising.

(Deng Gang, Wu Mengqi and Rong Zong are all pseudonyms)