Alibaba Group Holding Ltd.’s e-commerce division will make “huge” investments in its Taobao shopping app, as the newly created arm seeks to ward off competition from social media platforms.
(Bloomberg) — Alibaba Group Holding Ltd.’s e-commerce division will make “huge” investments in its Taobao shopping app, as the newly created arm seeks to ward off competition from social media platforms.
The subsidiary aims to focus on content creation as a conduit to bring in more users and will also launch artificial intelligence-powered tools for merchants, said Trudy Dai, chief executive officer of the Taobao Tmall Commerce Group.
That push is likely a response to a still-anemic online commerce market and growing competition from ByteDance Ltd.’s Douyin and other short-video and livestreaming platforms. As young people buy more goods they see on video, incumbent leaders like Alibaba face pressure to deliver a similar experience. Taobao will make “timely adjustments” to its platform fees and commission rates to benefit merchants, according to Dai. They’ll also be provided with an expanding suite of free smart operation tools.
“We will make huge, historic investments to scale up the user base for the benefit of merchants,” she said at a conference last Wednesday, in remarks shared by the company on Monday. “We will drive content creation in all areas, with much larger investment in content than ever before.”
Alibaba’s shares gained 3.5% in US trading, in part because its annual report cleared a previously disclosed regulatory review.
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The announcement comes ahead of Alibaba’s first-quarter results on Thursday, with analysts estimating a sub-3% sales increase as the industry grapples with China’s uneven post-pandemic recovery and the lingering impact of Beijing’s crackdown on Big Tech. Last week, closest rival JD.com Inc. posted a 1.4% gain in revenue for the quarter, its slowest pace of growth on record.
As the country’s online commerce leader, Alibaba carried out an historic overhaul in March to create six new companies, paving the way for its cloud, logistics, and ecommerce units to debut on public markets.
CEO Daniel Zhang said at the time that the company would consider gradually giving up control of some of the units, and already there have been preparations for initial public offerings in Hong Kong for the logistics arm, Cainiao Network Technology Co., and its grocery chain Freshippo. More recently, the group’s international online shopping unit has also been said to be exploring a US public listing.
Taobao Tmall would be the one exception and the plan is for it to remain a wholly-owned Alibaba entity, executives have said.
Dai didn’t provide more specifics about AI. Along with China’s other tech leaders, Alibaba has made AI development a priority as a flurry of investments and talent have entered the burgeoning sector following the launch of OpenAI’s ChatGPT. The company has said it expects to incorporate its large language model, Tongyi Qianwen, into all of its products and services in the near future, even as Beijing’s regulators have signaled it will mandate a security review of generative AI services before they can be put into operation.
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–With assistance from Jinshan Hong.
(Updates with share action and previous comments from the first paragraph)
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