It's reasonable and unexpected. On August 15, Alibaba released its financial report for the first quarter of fiscal year 2025 as of June 30. In this quarter, the group's revenue reached 243.236 billion, a year-on-year increase of 4%, slightly lower than market expectations; opera

It is reasonable but unexpected.

Although Alibaba is still one of the largest and most profitable Internet companies in China, its basic financial situation continues to be under significant pressure. Moreover, a crack seems to be spreading from Alibaba’s core Taotian business.

Taotian, which continues to be under pressure,

, Taotian's business, which accounts for the absolute majority of Alibaba's revenue and profits, failed to usher in the expected absolute recovery in this quarter.

Compared with the group's other businesses, Taotian Group's revenue this quarter was 113.373 billion, a year-on-year decrease of 1%, which became the key to Alibaba's failure to achieve a greater recovery in performance. Specifically, this performance statistics covers "618", but Taotian's China retail business revenue still decreased by 2% year-on-year.

Among them, Taotian’s direct sales and other business revenue fell 9% to 27.306 billion yuan from 30.167 billion in the same period last year, which also dragged down Taotian’s overall revenue performance. In this regard, Alibaba explained that Taotian proactively chose to reduce the scale of some consumer electronics and electrical appliance categories.

Before the financial report was released, the market took into account the weak macro-social consumption, especially the overall online physical retail sales that once turned negative year-on-year in June. Therefore, the market showed a conservative and wait-and-see tendency towards Taotian's business performance. .

However, Taotian’s core cash flow business: customer management revenue (cmr), only increased slightly by 1% year-on-year, which was far less than market expectations. Affected by this, the group's overall adjusted EBIT was 48.81 billion yuan, also down 1% year-on-year.

Taotian’s customer management income, that is, advertising and commission income from core e-commerce, is the core of Alibaba Group’s revenue and profits, and is the real lifeblood of the company. From the fiscal year 2021 to 2024, this revenue can generally contribute about 300 billion real money to Ali every year.

Even in fiscal year 2024, the ebita profit generated by Taotian's customer management revenue once accounted for 112% of the company. This also means that, except for core e-commerce, the profits of all other Alibaba businesses are negative 12%.

In other words, Taotian business has long been the foundation of Alibaba’s huge business empire. Once the foundation is weak and profits are stagnant, problems will follow.

Fortunately, in terms of expanding the pie and seeking growth, Taotian's gmv achieved a high single-digit year-on-year increase in the first quarter, and its order volume increased by double digits year-on-year. Moreover, its 88vip also increased from 35 million in the previous quarter. Over 42 million.

However, the bad news is that Taotian's old problem still exists : before Ali's drastic reform potential is fully released, in the current period of excessive adjustment, the gap between Taotian gmv and cmr (customer management revenue) is not only not Instead of shrinking, it continues to expand, and its monetization rate (take rate) is also substantially declining.

Moreover, such weakness is becoming the norm for Taotian. In the past two quarters, Taotian's GMV growth rate has been faster than the growth rate of customer management revenue. In the last quarter, when gmv returned to double-digit growth, Taotian cmr only grew 5% year-on-year.

Therefore, in the first quarter financial report conference call, Alibaba management misaligned gmv and cmr and explained, "When the market share is initially stabilized, starting from this quarter, we will start taking measures to improve the monetization rate and commercialization. Accelerate. "

It is worth noting that the businesses that Taotian gmv is improving at the fastest speed are precisely the businesses with relatively low commercialization rates. In addition, Alibaba did not disclose specific information about merchant growth: whether it is acc (number of annual active buyers) or DAU (number of daily active users).

When talking about performance this time, Alibaba CEO Wu Yongming believed that the quarterly performance showed that the strategy was working, focusing on improving user experience through good goods, good prices and good services, driving Taotian Group to stabilize its market share and return its business to a growth trajectory.

However, when Taotian refocused its strategic focus on gmv, it had to give investors a satisfactory explanation on how to retain users, how to improve its profit margins, and how to actually convert the increased traffic into revenue. Faced with multiple questions, Ali is still struggling to find answers.

Alibaba still needs to collect three to five dollars more

The key to the answer may lie in balancing : that is, how to find the optimal solution between fairness and efficiency. This is an extremely difficult problem that continues to test the wisdom of Ali’s management.

In fact, to narrow the gap between Taotian gmv and cmr means that while making the cake bigger, it is also necessary to cut the cake fairly. Only in this way can Alibaba's core e-commerce business be monetized and sustainably tapped.

At the end of last year, after undergoing some drastic personnel changes, Dai Shan, who had served as CEO of Taotian Group for only half a year, announced his resignation. After Wu Yongming took over, almost all the core management of Taotian Group was adjusted. Accompanying the personnel changes was a 180° U-turn in the focus of Taotian Group's business strategy.

In the past year, Alibaba’s internal changes have been upgraded again, cutting off all kinds of flashy projects, focusing on the main business, and continuing to explore the monetization capabilities of the main e-commerce business. However, the actual results of this series of radical reforms are impressive. complex.

On the one hand, after the war following Pinduoduo’s unlimited low-price war temporarily dissipated, Taotian has returned to gmv as its business development orientation. After the adjustment, the "refund only" model, which was once criticized and angered by merchants, can be loosened.

For example, in July this year, Taotian lowered the priority of price power in the e-commerce business sector. In Taotian’s new algorithm logic, gmv will replace price power as the new core indicator and the core of traffic distribution. It will become an "experience point" including logistics, praise rate, refund rate and other indicators. The "refund only" policy for merchants will also be relaxed, aiming to regain the favor of merchants.

However, on the other hand, , in the profit distribution link that is most likely to trigger emotional fluctuations among merchants, Taotian's cake-cutting hand has once again turned in.

At the end of July this year, Alibaba launched a drastic monetization adjustment: this company, which once had "customers first" as its values, announced that starting from August 9, Taobao e-commerce companies would begin charging a 0.6% platform technology service fee. In addition, many business lines, including Xianyu, Alibaba Cloud, Amap, etc., have adjusted the charging rules for platform merchants, and the Alibaba department has begun to fully enter the era of charging.

It is worth noting that previously, Taobao was the only e-commerce platform in China that was free and open to sellers.

After this rate adjustment, Taotian will cancel the annual fees of 30,000 and 60,000 that are only charged to Tmall merchants, and the annual fees paid for 2024 will be refunded. In addition, Taobao will issue Alimama coupons to Taobao sellers whose sales exceed 120,000 yuan and below 1 million yuan. The coupon value is 50% of the basic software service fee paid by the seller to Taobao in 2024.

But the problem is that under Taotian’s new distribution system, it may objectively increase the cost burden on merchants. For example, Tmall merchants previously only had to pay an annual fee of 30,000 to 60,000 yuan. Most merchants can enjoy a full refund of the annual fee once they complete sales of 10-20 times the annual fee threshold, and half of the annual fee will be refunded if they complete half of it. Refund.

Under the current new regulations, merchants must pay an upward service fee of 0.6% for each order. This also means that the more orders a merchant makes, the higher the service fee will be, with no upper limit. estimates that if converted to GMV in 2020, the service fees under Taotian's new rules will bring in 24.8 billion in new revenue, and more merchants will be included in the charges.

charging sellers basic software service fees is only one of Taotian's measures to increase its own income. In April this year, Alimama also released a new advertising product: “Site-wide Promotion”. It claims to mobilize the global traffic of the entire Taobao system, including search, homepage, post-purchase information flow, etc., in a more intelligent way, thereby driving the overall improvement of sellers' GMV.

From Taotian's perspective, the purpose of site-wide promotion is to better help merchants achieve roi (conversion to achieve gmv/distribution cost). can be viewed from another perspective. “Whole-site promotion” will also bring more revenue to Taotian.

As a horizontal comparison, after Pinduoduo launched a similar advertising model in 2021, its advertising revenue growth bottomed out: in fiscal year 2021, Pinduoduo’s advertising revenue was 72.56 billion, and in fiscal 2023, it quickly surged to 153.54 billion.

Although Wu Yongming previously said that among most e-commerce platforms, Taobao is currently "the highest category among sellers' ROI."

However, it will still take some time before Taotian fully rolls out the site-wide streaming model. And whether this model will impose a greater cost burden on platform merchants requires more observation. Previously, there were reports that after some merchants initially tried "site-wide promotion", they found that they needed to set the launch budget to about 1.5 times the total historical launch budget of the product in order to ensure the stable realization of ROI.

Because of this, from the low-price model, to "refund only", to the current model of increasing rates, site-wide promotion, etc., it is obvious that Taotian Group intends to promote merchant budgets and operations by activating GMV The focus will return to achieve more business realization.

However, in this game of growth and profitability, Alibaba, which is under huge pressure, seems to be somewhat deformed in the balance between benefiting customers and pleasing users. More than a year after Jack Ma proposed "returning to Taobao, returning to users, and returning to the Internet," it is not the platform itself that pays the "price" every time, but the merchants.

Overcorrection must be overcorrected, and results will still take time

In April this year, when answering what was the most severe competition facing Alibaba, Tsai Chongxin said sincerely:

"When we look internally and reflect on the situation in the past few years, , we found that we fell behind because we forgot who our real customers were, and we didn’t give them the best experience.”

From the leader in the e-commerce industry, to For Pinduoduo’s strategic followers, from the decline of gmv to the eagerness to find new growth points, from Taobao special edition, community group buying business Taocaicai, to the subsequent series of organizational structure and management in-depth adjustments, Alibaba’s Taotian business in recent years However, no real in-depth adjustments have been completed.

On the one hand, Alibaba ignored user experience, resulting in missing major opportunities to sink the market after 2020. On the other hand, Alibaba's decrease in emphasis on small and medium-sized merchants at that time also led to the outflow of merchants. And these are the foundation of Ali’s life.

At present, Alibaba’s in-depth adjustments have once again ushered in a comprehensive turn. After Wu Yongming took over as CEO of Alibaba Group, Alibaba went full steam ahead, concentrating all resources on its pursuit of success, and taking various measures to try to find a balance between sales and fairness in terms of revenue and profits.

Generally speaking, if you want to win a game from the beginning to the end, the easy thing is that when all factors are flowing at the beginning, adjustments can be made quickly, regardless of the cost, and immediate results. The difficult thing is that when the game enters the later stage , when things start to solidify, even the smallest adjustments require more effort.

Of course, it is an objective problem to turn around the ship in a catastrophe, so overcorrection must be overcorrected, which is also a must.

At present, people can see that whether it is adjusting rates or introducing new push advertising methods, Alibaba is becoming more and more urgent under heavy pressure. But when many frustrations, pressures, and tests are piled on this company, in the past few years, the merchants who have continuously contributed about 300 billion real money and silver management expenses to the Alibaba family every year seem to have become a business that can be ignored by anyone under this earth-shattering change. Repeatedly fiddled with and pulled apart.