Jack Ma warned Alibaba to follow in the footsteps of Nokia, Kodak, when the king of e-commerce gradually lost his throne

SCMP reported that at the end of May 2023, Alibaba founder Jack Ma held an internal meeting with the group’s e-commerce leaders to warn about Nokia and Kodak lessons. .

During the meeting, Jack Ma suggested that Alibaba refocus on the Taobao platform as well as the Internet instead of racing on impressive sales data, thereby surviving when the Chinese economy slows and consumers are limited.

The above meeting took place just a few weeks before the head of Taobao Eddie Wu Yongminmg suddenly became the new CEO of Alibaba from September 10, 2023.

Current CEO Daniel Zhang will step back to manage Alibaba Cloud’s cloud computing business in preparation for the division’s initial public offering (IPO).

Even though Jack Ma has given up all positions in the company, he still has a great influence on employees, investors as well as the image of Alibaba. Therefore, in the meeting at the end of May, the founder confidently advised the leaders of Taobao and Tmall directly that they must not be complacent with their dominant position in e-commerce in China and should always be wary of the possibility of failure.

The 58-year-old billionaire has cited the lessons of Nokia, the brand that once dominated the global mobile phone segment but lost to smartphones, and Kodak, the world famous film camera company that was crushed by digital cameras. It shows how quickly market leaders can collapse.

“Alibaba needs to return to focusing on Taobao, on users, on the Internet instead of impressive sales data for shareholders,” SCMP newspaper quoted Jack Ma as saying at the meeting.

Through the Golden Age

According to SCMP, Jack Ma’s idea of ​​”returning to Taobao” means that Alibaba should not only focus on increasing the number of buyers, but should also spend the budget to support small retailers on its platforms.

Taobao e-commerce market was established by Alibaba in 2003 and is the first e-commerce platform of the group. This product has achieved great success by helping small sellers beat the big players like eBay.

Meanwhile, Tmall is also a subsite of Taobao established in 2008 to meet the market demand for the brand of Chinese consumers. Although after a period of impressive growth, the e-commerce industry in general and Alibaba in particular are entering a period of decline.

A typical example is on the last June 18 shopping holiday, despite being a major shopping holiday, most e-commerce platforms this year refused to publish the total transaction value (GMV). This is also the first time in history that both Alibaba and JD.com have refused to announce the GMV, a sign many experts see as a retreat from the golden age of the e-commerce industry.

Alibaba even “frustrated” companies that provide data on the consequences if they publish the GMV of the group’s e-commerce platforms such as Tmall or Taobao.

“This year, the sales figures are like something sensitive,” an employee of a data firm told the Nikkei Asian Review.

Answering SCMP, an unnamed Alibaba employee confirmed that the group has begun to reduce support for big brand items on Tmall such as iPhones to switch to sponsoring cheaper products such as phone covers, capital. Usually sold by small retailers.

The economy is difficult, young workers are unemployed at a record 20%, a series of industries from real estate, education to technology are regulated by the government, causing people to worry and increase saving instead of spending. .

“Household savings in China have reached a record high, which shows that people are reluctant to use their bank deposits to spend or invest in industries such as real estate, which are struggling. on liquidity. We’re seeing a widespread lack of confidence in the market, not just in retail,” warned Pictet Wealth Management’s Asia head of macro research, Dong Chen.

The difficult economic situation puts Alibaba in great danger when it can easily lose its leading position like Nokia and Kodak at any time, especially in the context of the current restructuring of the Beijing government. now.

The fact that Jack Ma has “blasphemy” statements in 2020 has caused the Chinese government to suddenly stop the IPO of Alibaba’s Ant Group, and at the same time make this billionaire stay hidden for the past few years. Alibaba itself also had to restructure at the request of the Beijing government, and received billions of dollars in fines for violations after investigations.

More ironically, it was also Jack Ma’s careless statements that triggered the wave of China’s correction of the technology and startup industry, thereby indirectly creating the current consequences for the e-commerce industry.

Change to survive

Returning to the meeting, Jack Ma said that Alibaba needs to uphold the principle of being an Internet company, focusing on the customer experience where both the seller and the buyer rather than running after sales. quality erosion.

Therefore, Alibaba needs to focus more on customers’ online time on its platforms rather than the number of people participating or making purchases.

In addition, this billionaire said the corporation should also flatten the structure to limit the need to report through too many levels, and at the same time let employees have greater autonomy and responsibility at work.

Alibaba’s meeting took place in the context that this group had to split into 6 subsidiaries to meet the requirements of the Beijing government. However, the e-commerce segment of Taobao and Tmall still accounts for 70% of the group’s total revenue and is still the main golden egg of the empire built by Jack Ma.

However, Alibaba’s position is under strong threat when a series of strong competitors appear. Besides JD.com, which has existed for a long time, Pingduoduo-PDD, Temu’s parent company is making waves in the US, and Houyin – the Chinese version of Tiktok, is also eroding the market share of Jack Ma’s family.

It is very clear that Alibaba is facing a rather big risk when it comes to both internal and external challenges, and finding a way to hold the No. 1 position in the e-commerce industry in a market of billions of people is an urgent matter that founder Jack Ma cares about despite He no longer holds any position in the company.

*Source: SCMP