Alibaba names new Taobao and Tmall CEO in major move to fend off rivals
Alibaba names new Taobao and Tmall CEO in major move to fend off rivals
Li Chengdong, founder and chief analyst at e-commerce consultancy Dolphin, said Alibaba has “blurred” its focus on e-commerce in recent years as it evolved into a sprawling business empire across a variety of sectors, opening the door to its more budget-focused rival Pinduoduo, which is known for cut-to-the-bone deals.
“Alibaba is facing fierce competition from Pinduoduo, and the stakes are very high, especially from the loss of users to its rival”, Li said.
But Wu’s background could help make Alibaba’s e-commerce operations more technology-driven, according to Wang Xiaoyan, an analyst at market consultancy 86Research.
“Taobao is expected to distribute traffic through algorithms, similar to Pinduoduo, in our estimation,” Wang said. This will make the platform less labour-intensive, she added, and reduce operating costs for merchants, benefiting Alibaba with higher margins in the long run.
Chelsey Tam, a senior equity analyst at Morningstar Asia, noted that the frequent changing of the guard within Alibaba this year may also be contributing to general “confusion” about the company.
Alibaba also recently suspended a planned public listing for its grocery business Hema Fresh. Both moves dealt a blow to Alibaba’s ambitious restructuring plan.
Alibaba’s previous bet that Chinese consumers would “upgrade” their spending did not come to pass amid a slow economic recovery in China after the country ended its strict pandemic control measures last December. Three years of Covid-19 controls and lockdowns had made consumers more price-sensitive.
Chen Hudong, an analyst at Hangzhou-based e-commerce consultancy 100ec.cn, said Pinduoduo has benefited from consumers holding back on discretionary spending, as it is a more likely destination for shoppers looking for greater value for money.