Written by Wang Huiying

Edited by Midnight

Teachers' Day on September 10th holds a special significance in the history of China's Internet commerce. It marks the anniversary of the Alibaba Group and the birthday of its founder, Jack Ma.

This year, Alibaba turns 25, and Jack Ma is 60 years old. In his latest remarks, Ma shared new thoughts on Alibaba's current status and future prospects.

'I am proud to be an Alibaban!', Ma repeatedly mentioned the word 'pride' 11 times in his internal speech. He said that what he was most proud of in the past 25 years was not founding how many companies, but how much change and value these companies brought to society.

Besides pride, Ma also acknowledged the challenges currently faced by Alibaba. 'No company can remain the best in any field forever, and only competition can make us stronger,' he said.

Within half a year, the founder has spoken twice on the internal network, once for reflection and once for motivation. In the new Internet cycle, it is undeniable that Alibaba faces increased competitive pressure. For Alibaba employees, motivation and reflection are equally important at this critical juncture.

Image source: Alibaba official website

From the rise of Taobao and Tmall to the birth of Alipay, and then to the in-depth layout in fields such as cloud intelligence, logistics, and instant retail, Alibaba has transcended its role as a single e-commerce platform. Like a traveler, it has continuously expanded its horizons.

This journey has been fraught with challenges. In a market surrounded by fierce competitors, Alibaba's greatest courage lies in its constant adaptability. As Ma put it, 'Over the past 25 years, we have seemingly been struggling, losing, suffering, and persevering amidst setbacks, pushing forward and nurturing our ideals with grit and a smile.'

Especially in the past year, facing changes in the global economic landscape and intensified industry competition, Alibaba has undertaken profound self-reflection and adjustment, shifting from pursuing scale growth to focusing on quality improvement. Sweeping reforms have been implemented, encompassing both internal management and business innovation.

Under the '1+6+N' organizational restructuring, Alibaba has become more agile, with each group forging alliances and pursuing clearer goals and missions.

Taobao and Tmall aim to return to their roots, focusing on users and the Internet; the Cloud Intelligence Group operates independently; both are led by Alibaba CEO Wu Yongming, forming two core engines driving growth;

Freshippo and Local Life Group have undergone leadership changes, with the organization becoming younger and faster to profitability;

Cainiao has withdrawn its IPO application, prioritizing maximum expansion while also collaborating closely with Alibaba's e-commerce operations...

One year later, Alibaba's various businesses are still undergoing transformation, facing numerous challenges and even the possibility of being surpassed. This path is destined not to be paved with flowers and applause.

How will Taobao and Tmall, Alibaba's core businesses, regain their high-speed trajectory and widen the gap with competitors? In the face of global market volatility, how can Alibaba's various businesses stabilize? These questions require new solutions from Ma Yun and Alibaba's management team in the future.

1. After 25 years of entrepreneurship, what are Ma Yun's reflections on Alibaba?

In 1999, when most people were still debating the merits of the Internet bubble, Ma Yun quietly planted the seed of Alibaba.

No one could have foreseen that this seed would germinate, flourish, and eventually grow into a towering tree over the next 25 years – a diversified business group that has not only transformed China but also influenced the world.

Failure and mistakes are words that Ma Yun is not afraid to mention.

Before successfully establishing Taobao, Ma Yun had already started four failed ventures, from China Yellow Pages to the Ministry of Foreign Trade and Economic Cooperation.

Years later, reflecting on those experiences, Ma Yun candidly stated, 'If you start a business, spend more time thinking about why others have failed rather than why they have succeeded. Success often has many factors that are difficult to replicate, but failure is something you can avoid repeating.'

Early Ma Yun during his entrepreneurial days, image source: Alibaba official website

Ten years ago, on the occasion of Alibaba's 15th anniversary, Ma Yun looked back on the company's journey at Tsinghua SEM's graduation ceremony. Admitting to having made countless mistakes, Ma Yun said that Alibaba had survived over 100 near-fatal crises in its first 15 years.

In 2018, at the Winter Davos Forum, Ma Yun again shared his thoughts on life and Alibaba. 'If I had the time, I would write "One Thousand and One Mistakes of Alibaba." These experiences are among the most valuable in my life. My wealth is not measured by my achievements but by the pains and mistakes I have endured.'

This year, as Alibaba celebrates its 25th anniversary, every step it takes is under the spotlight. Every highlight moment is filled with accolades, and every pressure point is magnified.

In 2003, eBay dominated the C2C e-commerce market, and no one thought of competing with them. But Ma Yun did. Keeping Taobao's launch a secret for the first three months, only a handful of Alibaba executives knew about it.

Porter Erisman, a former Alibaba vice president, was one of the few executives privy to this plan. In his book, he recalls Ma Yun's mischievous smile as he confided in him, pausing dramatically before saying, 'We're going to declare war on eBay.'

With no turning back, Ma Yun threw himself into realizing his dream. Due to its commission-free policy, Taobao attracted over 10,000 registered users within a month of its launch, effectively hindering eBay's entry into China.

The story surrounding Taobao is still fresh in people's minds. In 2004, Alipay was launched, addressing the trust issue that had hindered online shopping. In 2006, eBay closed its Chinese website, and in 2014, Alibaba went public on the New York Stock Exchange, with several Taobao shop owners among the eight people ringing the bell.

At Alibaba's 20th-anniversary celebration in 2019, which resembled a concert, Ma Yun personally sang 'Bloom Like a Flower,' creating quite a buzz. It was also during this event that Ma Yun announced his retirement, ushering in the era of Daniel Zhang at Alibaba's helm.

Ma Yun's retirement marked a turning point. During this period, the Internet commerce world was unpredictable, and the industry entered a period of stagnation. Alibaba bid farewell to its rapid growth and embarked on a new round of challenges.

In April 2021, Alibaba was ordered by the State Administration for Market Regulation to rectify its 'exclusive choice' practices; in 2023, Pinduoduo surpassed Alibaba in market value, posing unprecedented challenges to Alibaba's e-commerce business; and in 2024, one year after undergoing the '1+6+N' organizational transformation, Alibaba's radical changes failed to yield significant growth, and the company continued to navigate its adjustments.

The role of a founder is to step forward and stabilize morale during times of crisis. Ma Yun's rare public statements have consistently come at moments when Alibaba faced crises or low morale.

Image source: Alibaba WeChat official account

Two months into the '1+6+N' organizational reform, Ma Yun gave Taobao and Tmall Group a clear direction during an internal meeting: return to Taobao, return to users, and return to the Internet.

When Pinduoduo surpassed Alibaba in market value, Ma Yun congratulated the latter on Alibaba's internal network but remained confident that Alibaba would adapt and change. 'All great companies are born in winter. The era of AI e-commerce has just begun, presenting both opportunities and challenges for everyone,' he said.

On the first anniversary of the reform and restructuring, Ma Yun shared his thoughts on the company's reform and innovation in a thousand-word essay, emphasizing the importance of acknowledging and correcting past mistakes while facing the future with reforms.

As the reforms gradually deepen, the current results have validated Alibaba's phased approach to reform. Alibaba's transformation has transformed Ma Yun's attitude from 'Come on, Alibaba!' to 'I am proud to be an Alibaban!'

However, Alibaba's current status still concerns Ma Yun. 'As AI technology surges in the Internet sector, and competition intensifies across various industries, many of Alibaba's businesses face challenges and the risk of being surpassed,' he said.

Back in 1995, when Ma Yun first touched a keyboard and computer, connecting to the Internet for the first time in his life, he decided to quit his teaching job to start a business.

Upon his entrepreneurial success, Ma Yun credited the times. 'If I had been born 10 years earlier or later, I wouldn't have had the opportunity to get involved in the Internet. It was the times that gave me this chance,' he said.

Indeed, there are no companies of the times; there are only companies of the era. Amidst the tides of the times, Alibaba's greatest constant is change.

2. Alibaba is no longer the Alibaba of old; there are more opportunities and challenges

Over the past 20 years, which companies have had the greatest impact on China's economy, China's Internet, and even everyone's daily lives?

Alibaba is undoubtedly one of them.

Twenty-five years ago, Alibaba chose to pioneer e-commerce with the mission of 'making it easy to do business anywhere.' To nurture the market, Alibaba invested heavily, pioneering in areas such as payment, logistics, and customer service around e-commerce. Its subsequent growth convinced the market – in 2018, Alibaba held nearly 70% of China's e-commerce market share.

Being number one is not easy.

For a long time, as new players entered the market and low prices gained popularity among consumers, Alibaba's dominance in the e-commerce industry was weakened. This phenomenon culminated on the day Pinduoduo surpassed Alibaba in market value.

In terms of market share, Alibaba remains at the top but has dropped to around 40%. The gap between Alibaba's core businesses and its competitors has narrowed, and these competitors are catching up fast, visibly increasing Alibaba's challenges.

Over the past 25 years, Alibaba is no longer the same company it once was. During the golden decade of rapid Internet growth, scaling up became the main theme for Internet giants. In addition to e-commerce, Alibaba expanded its business portfolio widely, striving for territorial gains and horizontal expansion.

Making the organization serve the strategy and stimulating innovation are the challenges faced by an enlarged Alibaba.

In 2015, Alibaba first proposed the 'Big Middle Office, Small Front Office' strategy to lighten the load on frontline operations. Under this organizational design, the Big Middle Office connected various business systems, providing underlying support that allowed the front office to move swiftly with minimal baggage. Hema Supermarket emerged from this strategy.

However, as a company's diversified businesses reach a certain scale, the middle office can become bloated, slowing down business development instead of facilitating it.

In 2021, Alibaba announced the establishment of four business segments, upgrading from the middle office strategy to 'diversified governance,' with business presidents assuming the role of 'mini-CEOs.'

By 2023, Alibaba continued to navigate its path, pursuing a more thorough split, transforming from one Alibaba into 'six business groups.'

Essentially, it was still Ma Yun who led Alibaba's largest-ever organizational reform. Reflecting on this new round of changes, Ma Yun summarized, 'We are correcting bad habits and reforming vested interests.'

Just when the outside world thought Alibaba's reforms would come to an end, the company continued to adjust. From a simple 'split' to make Alibaba 'smaller' to a combination of splits and integrations to make Alibaba more focused, the company transitioned from the Daniel Zhang era to the Wu Yongming era.

This remains Ma Yun's vision. He hopes that by tackling the ills of large companies, Alibaba can return to efficiency and market supremacy, becoming simpler and more agile once again.

As the ship adjusts its course, the helmsmen have new tasks ahead.

In September 2023, Wu Yongming officially took over as CEO of Alibaba Group. Since then, power has gradually concentrated in his hands. In the following months, Wu Yongming concurrently held three positions: Chairman and CEO of Alibaba Group, Chairman and CEO of Taobao and Tmall, and Chairman and CEO of Cloud Intelligence Group.

With the CEO leading the charge, Taobao and Tmall, as well as Cloud Intelligence, are Alibaba's top priorities at present.

After Ma Yun set the direction for Taobao and Tmall to return to their roots, focus on users, and the Internet, Wu Yongming consolidated resources both inside and outside the platform to concentrate efforts on achieving great things.

Image source: Alibaba official website

To return to Taobao, resources related to e-commerce are flowing back to the platform. Merchants and products from Taobao Tejia are returning to Taobao, and 1688 merchants are opening stores on Taobao. To refocus on users, Taobao has eliminated pre-sales, introduced user-friendly features such as 'Refund Only,' free shipping to Xinjiang, and free return shipping for 88VIP members. To reconnect with the Internet, Taobao has relaunched its web version.

Earlier this year, Wu Yongming noted internally that Taobao and Tmall did not need new business models. 'We have bet too much on new directions on Taobao, which has inadvertently led to insufficient investment and attention to basic e-commerce needs,' he said.

While focusing on Taobao and Tmall, Alibaba is also streamlining its organization and simplifying processes to reduce the burden on these core businesses. Alibaba is reassessing the future of physical retail operations that rely on Taobao and Tmall for funding, such as Hypermart, Hema Supermarket, and Intime Retail.

Wu Yongming is grasping both ends of the stick with Taobao and Tmall on one hand and Cloud Intelligence on the other. For Alibaba Cloud, another core business, the focus has shifted from pursuing revenue to profit.

Last November, Wu Yongming set the tone for Alibaba Cloud, stating that it would prioritize AI-driven public cloud services. This year, Alibaba has aggressively invested in AI while launching the 'largest-ever price reduction' for cloud products. AI has become Alibaba Cloud's fastest-growing segment.

Furthermore, Cloud Intelligence Group will no longer pursue a complete split, and both Hema Supermarket and Cainiao are seeking more opportune moments for their IPOs. Judging by the results, Alibaba is becoming younger, and each group is entering a new stage of development.

In this new cycle, Wu Yongming is leading Alibaba in cultivating a younger management team and forging a company that is 'tightly focused on core businesses and burden-free in non-core areas.'

'No company can remain the best in any field forever. Only competition can make us stronger and the industry healthier.' Over the past 25 years, Alibaba's narrative has been one of overcoming obstacles, trying and erroring, reflecting, and starting anew.

3. Where is Alibaba headed in the next 25 years?

Since its inception, Ma Yun has aspired to build a company that lasts 102 years.

Why 102 years? Because founded in 1999, the company will span three centuries by that time.

To achieve this milestone, Alibaba will inevitably face immense competitive pressure and various challenges.

In August, Alibaba made three noteworthy announcements. Firstly, it officially completed its primary listing in Hong Kong, becoming a dual-primary listed company on both the Hong Kong Stock Exchange and the New York Stock Exchange. Secondly, Alibaba completed its three-year rectification and entered a new starting point for development. Thirdly, its performance rebounded, marking initial success of its reforms.

On August 15th, Alibaba announced its financial results for the first quarter of fiscal year 2025. For the quarter, Alibaba generated revenue of RMB 243.24 billion, up 4% year-on-year from RMB 234.16 billion in the same period last year.

Specifically, Taobao and Tmall's online GMV achieved stable growth, with order volume increasing by double digits year-on-year. However, revenue declined by 1% year-on-year to RMB 113.373 billion. Alibaba Cloud's quarterly revenue grew by 6% to RMB 26.549 billion, with AI-related product revenue surging by triple digits and public cloud business revenue by double digits.

In addition to e-commerce and cloud intelligence, the performance of other businesses also demonstrates the phased achievements of Alibaba's reforms.

For example, Hema achieved its first off-season profitability from March to June this year after strategic contraction, cost reduction, and efficiency improvement. The new CEO, Yan Xiaolei, also set a goal for Hema to achieve an annual GMV of 100 billion yuan in three years, representing a 69% increase from 2023;

For example, Cainiao's revenue increased by 16% year-on-year to 26.811 billion yuan in the first quarter of fiscal year 2025, primarily driven by revenue growth and operational efficiency improvements from cross-border logistics fulfillment services;

In the case of International Digital Commerce, the group's revenue for the quarter increased by 32% year-on-year to 29.293 billion yuan, exceeding market expectations for eight consecutive quarters, with International Retail Commerce achieving a rapid 38% growth;

Local Life, driven by the growth in orders from Ele.me and Amap in the first quarter of fiscal year 2025, saw a 12% year-on-year increase in revenue to 16.229 billion yuan.

It must be acknowledged that Alibaba's recovery is still accompanied by the pains of reform. As different businesses continue to adjust based on the competitive environment, the growth rates of multiple businesses have slowed down, resulting in slower revenue growth for the Alibaba Group in this quarter, with actual revenue 2.6% lower than expected.

"There aren't many saviors in the world. We need to build roads on sunny days, prepare during good weather, and buy an umbrella when the sun rises," said Jack Ma, urging Alibaba to always be ready for adjustments.

As a core business facing significant challenges and competitive pressures, Taobao was the first to make changes.

When the industry was getting stuck in a "low price" and "only refund" race, Alibaba decided not to follow suit but to explore a route more suitable for its e-commerce platform.

After this year's 618 event, Alibaba clarified multiple strategic adjustments to be implemented in the second half of the year at a closed-door meeting for Taobao merchants. A core change is that Taobao has weakened its absolute low-price strategy. Since last year, the system of allocating search weight based on "Five-Star Price Power" has been weakened, with greater emphasis placed on allocating based on GMV.

Specifically regarding business metrics, Taobao's assessment focus this year has shifted to GMV and AAC, rather than pursuing high DAC driven by low prices.

Clearly, Alibaba has a more precise understanding of "trade-offs" and a clearer vision of what it wants and doesn't want.

At the beginning of Alibaba's founding, Jack Ma hoped that the company would become a listed company in 2002, but that year it encountered the Internet bubble crisis, and Alibaba faced a crisis of collapse. Jack Ma delivered an inspiring speech to the team at that time:

My slogan is 'persist until the end,' even if I have to 'kneel' until the very end. At that time, I firmly believed one thing: If I am in difficulty, someone else is in greater difficulty; if I am sad, my competitors are sadder. Whoever can endure will win.

Twenty-five years have passed, and Alibaba has endured, covering one-quarter of its 102-year goal and continuing on the path to achieving the remaining three-quarters.

As Jack Ma said, Alibaba employees must always remind themselves not to lose themselves under the pressure of competition and circumstances. The reason why Alibaba is Alibaba is because of its idealistic spirit.

The winds of the times continue to blow. Over the past 25 years, Alibaba has never been a company that grew under protection. In the next 25 years, Alibaba will face no shortage of challenges but will continue to seek innovation and breakthroughs.

(The cover image of this article is sourced from the Alibaba WeChat official account.)