Alibaba said to launch direct online retail model to complement Taobao, Tmall platforms amid increased competition, weak consumer spending

  • A new app to be launched via Tmall will establish an online retail model in which Alibaba will directly source, buy, store and market goods
  • A number of consumer electronics brands have already started talks with Alibaba ahead of this launch

Alibaba Group Holding plans to introduce a direct online retail model to complement the operations of its flagship platforms Taobao Marketplace and Tmall, according to a Chinese media report, in a move that would bolster its core e-commerce business amid increased competition and weak consumer spending on the mainland.

A new app, called Mao Xiang in Mandarin, will be launched via Tmall to establish an online retail model in which Alibaba is directly involved in sourcing, buying, storing and marketing goods in a manner akin to rival’s traditional operation, according to a report by online media LatePost, citing anonymous sources.

A number of consumer electronics brands have already started talks with Alibaba ahead of its direct online retail model’s launch, the report said.

Alibaba, parent of the South China Morning Post, did not immediately respond to a request for comment on Thursday.

The new initiative, according to the LatePost report, is led by Alibaba’s business-to-consumer retail group and kicked off development at the end of last year.

News of this effort comes after Alibaba restructured the back-end operations of Taobao and Tmall, which make up the company’s core Chinese online retail platforms. Taobao was launched in 2003 as a marketplace for small businesses and individuals, while Tmall was set up in 2008 for international and Chinese brands and retailers to run their online storefronts.

The reorganisation involved the establishment of three new operation centres that are focused on platform strategies, user expansion and industrial development for merchants, according to a report in January by state-run newspaper People’s Daily, citing an internal Alibaba letter. Hangzhou-based Alibaba later confirmed the report, but declined to comment further.

The revised set-up is expected to sharpen the two platforms’ attention to user experience and encourage so-called mechanism innovation, according to the report. It said the designated leaders of those three centres report directly to Trudy Dai Shan, head of Alibaba’s new China digital commerce unit, which combines the company’s consumer-facing and wholesale marketplaces.

The stakes have been raised for Alibaba, as it eyes China consumption, globalisation and advances in technology to drive future growth after a challenging 2021, which saw the company weather increased regulatory scrutiny and stronger competition.

Apart from, Alibaba is facing growing competition on the mainland from the likes of Pinduoduo and ByteDance-owned Douyin.

Alibaba must also deal with a slowing domestic economy. China’s retail sales rose at an annual rate of just 3.9 per cent in 2020 and 2021, according to data from the National Bureau of Statistics, as the Covid-19 pandemic continued to disrupt industries.

Alibaba, which will report financial results for its December quarter next week, is expected to post an 11 per cent increase in revenue from a year earlier, the slowest pace on record, according to analysts’ consensus estimate compiled by Bloomberg. Alibaba projected between 20 to 23 per cent annual revenue growth for its current financial year that ends on March 31.

Author: Tracy Qu, SCMP

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