Alibaba Establishes Five Major Strategies for Taobao in 2023
Alibaba‘s management team announced five strategic focal areas for its e-commerce platform Taobao this year. These areas cover livestreaming, private domain traffic (turning casual users into dedicated ones), content, local retailers, and pricing power, media outlet LatePost reported. There is currently a preliminary plan for how to implement the strategies in these five areas, but it has not been finalized. In addition, Taobao has noted that its priority growth indicator this year is its daily active users rather than its gross merchandise volume (GMV).
Alibaba faces stiff competition in the market. According to data obtained by LatePost, Pinduoduo‘s 2022 GMV exceeded three trillion yuan ($432 billion), and that of Douyin’s e-commerce business was close to 1.5 trillion yuan ($216 billion). The combined GMV of the two companies is equivalent to over 50% of Alibaba‘s domestic e-commerce business. Moreover, due to the sustained growth of Douyin’s e-commerce business, ByteDance’s advertising revenue surpassed Alibaba in the first quarter of 2022 to become the highest in China.
Pricing wars will be the focus of competition among e-commerce platforms in China in 2023. Since his return to the company in November of last year, Richard Liu, Chairman of the Board of Directors of JD.com, has urged the company to implement a low-price strategy beginning this year.
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Rather than focusing strictly on low prices, an Alibaba insider said that the company pursues a good cost performance ratio.
On the 2022 fourth quarter conference call, Daniel Zhang, CEO of Alibaba, was asked how to compete with rivals who use discount pricing strategies. While conceding that prices are important, Zhang remarked that history shows that discounts are far from being the main drivers of sales, and that innovations and novel business strategies allow sellers to give the best goods and prices to consumers.
Taobao Live is one of the fastest growing businesses in Taobao in 2022. On the eve of the Double Eleven Shopping Festival last year, Taobao Live snatched several leading multi-channel network (MCN) organizations from Douyin.
Public traffic on Taobao is concentrated on the “recommendation” page, where personal recommendations are generated for each user using their web browsing data. In contrast, private traffic refers to where merchants play a role in generating customer traffic, including the “subscription” page, the shop homepage, and the group chat, which are important places for merchants to interact with fans and members. Alibaba is currently in the process of improving flagship stores on Taobao in part by remodeling the store interface, which has been dominated by shelves in the past. Construction of a membership management system for merchants and brands on Taobao will be a key focus of redesigning the user interface.
The category of “content” continues to be one of this year’s strategic priorities for Taobao. The information flow on Taobao has been slightly optimized.
“Local retailer” is not an unfamiliar term. However, due to improvements in warehouse logistics and larger distribution teams, the boundaries between different retailers, which were originally divided by distribution timeliness, have become increasingly blurred.