Author | Liu Baodan

Editor | Zhou Zhiyu

The e-commerce market is still undergoing a major reshuffle. Under the attack of rivals such as Pinduoduo, Douyin, and Jingdong, Ali has invested heavily to maintain its position in the market. Now, Ali can finally breathe a little relief.

On May 14, Alibaba Group announced its Q4 and annual results for the 2024 fiscal year. In this quarter, Alibaba achieved revenue of 221,874 billion yuan, an increase of 7% over the same period last year, an increase of 5 percentage points over the same period last year. Among them, Taotian achieved revenue of 93.216 billion yuan, an increase of 4% year on year, reversing the decline in the same period last year and returning to growth.

A more positive sign is an increase in sales. This quarter, Taobao Tmall achieved double-digit GMV growth. In comparison, Taobao Tmall's GMV growth rate in the same period last year showed a decline. After a year of development, Taobao and Tmall's sales have returned to double-digit growth, which also means that Taotian is regaining market initiative.

In addition, Ali's siege of the international market is also beginning to bear fruit. Ali International and Cainiao achieved revenue growth of 45% and 30%, respectively, this quarter. Core Alibaba Cloud revenue grew 3%, and AI-related revenue in particular recorded a three-digit year-on-year increase.

As for Ali's local lifestyle, the revenue growth rate this quarter was 19%. After Yu Yongfu stepped down as chairman, the next trend in this business will be the focus of attention; the only decline in Ali's six major businesses was Big Entertainment, where revenue dropped slightly by 1%.

Over the past year, Ali has gone through a full range of structural and personnel adjustments. After Wu Yongming came to power, Ali's future strategy became more and more clear, which is to focus on Taotian and Alibaba Cloud. In particular, it is necessary to increase investment in improving the user experience to support Taotian Group to regain growth and stabilize its market leadership position.

Ali wants to maintain its share and growth rate in the e-commerce market. To this end, Ali has increased its inclination towards Taotian in terms of personnel and resources, and is willing to sacrifice a certain amount of profit growth.

In fact, when Wu Yongming took over Taotian at the end of December last year, he formed a new young team. He also transferred elite generals such as Wu Jia, president of Ali's Intelligent Information Business Group, and Shu Duan, founder of Xianyu, to key positions at Taotian.

In order to regain users' love for Taobao, Taobao recently launched a series of measures, including 618 cancellation of pre-sales, refunds only, and 88VIP unlimited returns and free shipping. In order to attract users' attention, Taobao announced the addition of 10 billion dollars in cash and 100 billion in traffic to increase content e-commerce.

This is also reflected in profit performance. According to financial reports, Taotian's adjusted EBITA for the quarter was 38.501 billion yuan, down 1% year on year. This is mainly due to Taotian's increased investment in user experience and technology infrastructure.

Although market competition has eroded profit growth, for Ali, winning users and markets is a top priority. This is the result that Ali's management wants.

At the performance conference call that night, Wu Yongming said that Taotian Group's “customer first” strategy has paid off, and that investment in price power and user experience has received positive feedback from consumers. The number of quarterly buyers and purchase frequency have increased strongly, driving GMV to achieve strong double-digit growth.

Next, Ali will continue to carry out strategic focus. Ali's management said, “Improving product competitiveness, efficiency, customer service and consumer experience, thereby driving GMV growth and user consumption frequency is our top priority this year.”

After a sharp decline in market share and market capitalization briefly surpassed by Pinduoduo, Ali is trying to break out of the trough and regain confidence in future performance growth. At the conference call, Ali's management rarely gave very clear performance guidelines.

Ali expects that the improvement of e-commerce user experience will drive strong domestic GMV growth in fiscal year 2025, and that overseas e-commerce will maintain a rapid growth trend. Driven by AI and overseas e-commerce, the Group's revenue will resume double-digit growth in the second half of FY2025.

Capital markets are also revaluing Ali. Three days after the results were released, the stock price rose sharply. On May 17, Alibaba's US stock closed up 7.05%, a six-month high. A number of financial institutions have also expressed confidence in Ali. Goldman Sachs and Bank of America Securities have both raised Alibaba's target price. Goldman Sachs emphasized Alibaba's steady performance and resumption of growth in the 2024 fiscal year.

A number of well-known investment institutions have begun to support Ali. Hedge fund legends David Taper, Duan Yongping, well-known hedge fund managers, and Michael Burry Management, the prototype of the movie “The Big Short,” all increased their holdings of Ali in the first quarter. According to the 13F submitted by Appaloosa managed by David Taper, their holdings of Alibaba increased significantly this quarter, and their holdings with Ali increased to 11.25 million shares.

However, although Ali's series of counterattack policies are beginning to bear fruit, the e-commerce market is in the process of continuous dynamic development, and the challenges faced by Ali should not be underestimated.

On the one hand, social consumption is sluggish, and consumer shopping tends to be rational; on the other hand, competitors including JD, Douyin, Pinduoduo, and Kuaishou are also making continuous efforts. For example, Douyin e-commerce has launched a low price strategy and strongly recommended low-priced products in shopping malls and short videos; JD is also using “content ecology” as its strategic direction in 2024.

E-commerce has already entered the Red Sea of competition. Every time Ali grows, it means taking food from rivals. This long and grueling business game will continue to evolve in practice, and Ali still has more battles to fight.