Since the birth of the local life business, Ali has never given up its ambition to occupy the market, and attaches more and more importance to it.

On July 2, Zhang Yongfa, chairman of the board of directors and CEO of Alibaba Group, sent a letter announcing a series of organizational upgrading decisions.

The full letter pointed out that Alibaba will form a life service section, including local life, Gaode and Flying Pig, based on the three major businesses of geographic location services. Yu Yongfu will be in charge of the plate on behalf of the group and report to Zhang Yong.

Approved by the board of directors of the local life service companyLi Yonghe (Lao Ding) was appointed as the former CEO of the local life company, Wang Lei (Kunyang), who will be appointed back to the group after leaving office.Li Yonghe, Gaode President Liu Zhenfei (Zhenfei) and Flying Pig President Zhuang Zhuoran (Nantian) reported to Yu Yongfu respectively.

This is another adjustment after more than half a year after the adjustment of the organizational structure of Ali Local Life Service Company in December last year.

Zhang Yong pointed out that today, Ali has formed a multi-engine-driven, multi-service track development situation, we must face customer needs and industrial characteristics, and form a plate governance model based on the business unit management responsibility system. "this organizational upgrade is also an important step in the construction of plate governance on the basis of cloud intelligence and B series assigned by the president on behalf of the group."

What information does Ali reveal behind upgrading the local life service section? What changes will take place in the war situation of local life?

Local life ushered in“New helmsman”

An important change in the organizational structure of the local life business is reflected in the changes in senior management.

Ali Local Life Service Company was founded in 2018 as a result of the merger of ele.me and word of mouth. Among them, ele.me, acquired by Ali for $9.5 billion, is mainly in charge of the home-to-home business, while word-of-mouth is in charge of the store-to-store business. The new company is headed by Wang Lei, a partner of Alibaba Group, and reports directly to Zhang Yong (nickname: Xiaoyaozi).

Wang Lei, who took over local life at first, was in high spirits and announced that he would join the "subsidy war" in July 2018. Ele.me was determined to invest 1 billion yuan. According to its goal revealed at the national agents' conference that year, it will be at least on an equal footing with Meituan takeout within one year, and "ele.me should account for at least 50 per cent of the share".

But a month later, Wang Lei changed his tune in an exclusive interview with Caijing: "the short-and medium-term goal is to have a market share of more than 50%." We don't have a specific timetable, which has something to do with the competitive situation. " The deadline for achieving the goal has been changed from "within one year" to "medium-and short-term".

In the following years, local life service companies entered a comprehensive "Amoy" stage. The specific measures are to transform the underlying structure, integrate ele.me, word-of-mouth and other products, and open the entrance for these products, such as ele.me settled in hand Amoy, word-of-mouth access to Alipay and so on.

Ali has high hopes for local life, but the result is not entirely satisfactory.

According to a report released by Analysys, ele.me + Baidu takeout (later acquired by ele.me) accounted for 48.9% of China's Internet catering takeout market in the first quarter of 2018, 3.5 percentage points higher than Meituan takeout (45.4%). But ele.me + Baidu has fallen from its 49.8% market share in the fourth quarter of 2017.

Since then, ele.me 's market share has been declining. According to Analysys, the market share of ele.me was 40.2% in the second half of 2018 and 43.9% in the first half of 2019; in the same period, Meituan was 54.5% and 52% respectively.

There are signs that ele.me has been gradually defeated by Meituan in the local life battlefield competition.

At the beginning of last year, it was reported that former Ant Financial Services Group CEO Hu Xiaoming will also serve as chairman of Ali Local Life Service Company, and Wang Lei will report to Hu Xiaoming and Zhang Yong. This seems to herald Wang Lei's next "fate".

According to the internal letter released by Zhang Yong, this round of adjustment, the life service plate parachuted two senior generals-Yu Yonfu and Li Yonghe. Li Yonghe directly took over as CEO of Wang Lei's local life company, whose whereabouts have not been disclosed after leaving office.

Li Chengdong, founder of the dolphin think tank, believes that the new round of organizational restructuring may show that Ali is dissatisfied with the performance of the local life service company and Wang Lei in the past. "the original business performance did not meet the business goals. So (Wang Lei) was replaced." Li Chengdong also pointed out that the new CEO Li Yonghe has a JD.com background, but his experience may be different. "it may be difficult for outsiders to integrate internal resources (local life)."

According to public data, Li Yonghe was born in 1971 and began to participate in the supply chain construction and large-scale operation of the electrical chain industry at the end of 1990s. He has rich experience in the supply chain. Since joining JD.com in May 2011, Li Yonghe has served as the general manager of the warehousing department of JD.com Mall, the general manager of JD.com Mall North China Branch, and the COO of JD.com Mall.

In May 2016, it was revealed that Li Yonghe submitted his resignation to JD.com for personal reasons. After that, there was little news of him until June 2018, when Li Yonghe officially joined Ali as an assistant to CEO Zhang Yong.

In less than half a year around Zhang Yong, Li Yonghe was appointed president of Tmall supermarket business group in 2018, and then served as a director of Sanjiang Shopping and a non-executive director of Gao Xin Retail until this round of organizational restructuring.

It is not difficult to see that Li Yonghe has mostly worked in the retail supply chain industry in the past, and the local life service part has relatively little experience. And its direct reporting leader Yu Yongfu is lack of experience in related fields.

In 2014, Alibaba acquired Yu Yongfu, chairman and CEO of UC, through the acquisition of UC,. During his seven years in Ali, Yu Yongfu has experienced ups and downs, and he has done the most and is most praised by outsiders-integration.

Shortly after the acquisition of UC, Ali set up a mobile business group, with Yu Yongfu as its president, whose task is to integrate products acquired by UC, Gao de and other products into the mobile business group. Yu Yongfu, who was appointed to take over Gaode, has set a new strategic direction-focusing on user needs, focusing on map navigation products, not doing O2O services, and not considering commercial goals for three years.

At first, this idea was strongly opposed by O2O business informants, but the final results proved that Amap was right: when he first took over Gaode, Amap had less than 10 million daily active users (DAU). At the 2016 Yunqi Conference, Yu Yongfu announced that Yu Yongfu had more daily active users than Baidu Map, becoming the number one mobile app in the industry. In 2018, Amap DAU broke the 100 million mark, becoming the third largest traffic entrance of Ali after Alipay and Mobile Amoy.

The achievements in the process of integrating Gaode have also made Ali place high hopes on Yu Yongfu, who was appointed Chairman and CEO, of Ali Culture and Entertainment Group in 2016, which opened the way for the integration of "Ali Culture and Entertainment".

This time, Yu Yongfu is no longer facing the integration of one company, but the integration of six major business sectors, involving Ali Pictures, Oneness Group, Ali Music, Ali Sports, Ali Literature and Ali number Entertainment Department. Although six-in-one is not necessarily more difficult than integrating Gao de, it is even more complex.

In order to achieve the coordination and unity of various businesses, Yu Yongfu's approach is still a unified strategy. At the end of 2016, Yu Yongfu and Ali University Cultural and Recreation Class Committee put forward the strategic direction of large-scale entertainment-- the infrastructure construction of the cultural and entertainment industry. After that, under his leadership, big entertainment tried to adjust the transformation while integrating.

However, the huge business integration seems to make Yu Yongfu very difficult to do. In his more than a year in charge of Ali Entertainment, huge losses, heavy performance and other negative news, the most important long-term video business Youku also gradually fell out of the first echelon of the video track, the integration results were not as expected.

Yu Yongfu also stepped down as chairman of Ali Entertainment in 2017 and became the head of the eWTP investment working group, and has since faded out of view.

Today, the "Master of Integration" is back in charge of life services, and Ali's intention is self-evident. However, it is not known whether the life services sector can be revived under his leadership.

Fight in the same city and open fire on Meituan?

From the business level, the structural adjustment has incorporated Gaode and Flying Pig into the life service sector, or Ali's expansion of the life service boundary, a comprehensive signal to the Peugeot Group.

The war between Ali and Meituan has long gone from the takeout market to the field of life services, the competitive landscape is expanding, and anxiety seems to be on the rise.

The interface had previously quoted an employee of Ali's local life as saying, "Lao Yi (Xiaoyaozi) now has a meeting in local life once a week, and the last time we had a meeting like this was when we were doing shopping."

Some Ali employees also revealed that in the field of takeout, ele.me really felt that it could not beat Meituan, so this year (2020) Ali's strategy was to shift the battlefield and no longer just focus on takeout, but to expand the business scene and category, lengthen the battle line, and use Alipay traffic to direct the local life business.

In March 2020, Alipay held a partner meeting, and Sun Quan, chairman of Ali Local Life, announced that Alipay had officially turned to an open platform for digital life. You know, Alipay has 700 million daily active users, second only to Wechat, QQ and Mobile Taobao in China, and its traffic effect can not be underestimated. According to Ali Financial report, 45% of the new consumers of ele.me came from Alipay in the second quarter of 2020.

In Li Chengdong's view, Gao de and Fei Pig are merged into the life service plate together, and there is also a certain diversion value, "not only can get through the flow, but also the user experience is smoother." For example, consumers looking for hotel addresses on Gaode can guide Flying Pig.

Ele.me has previously revealed that after Alipay, Taobao, Tmall, Gaode and other traffic entrances are opened, ele.me word-of-mouth merchants can usher in more than 100 million visitors every day.

With diversion tools, Ali's life services are also gradually moving closer to Meituan in terms of business coverage, trying to promote the overall business development.

In the local life business, in July last year, ele.me announced a comprehensive upgrade, from delivery to delivery of all things, delivery services, continue to expand goods and services. This time, the inclusion of Flying Pig and Gaode marked Meituan's wine, travel and taxi-hailing business, with obvious meaning.

However, Ali sees the adjustment as the beginning of the next decade's new journey-the retail campaign in the same city.

It can be said that retail in the same city is one of the No. 1 projects that Zhang Yong focuses on. In April 2020, Alibaba was exposed to upgrade the Tmall supermarket group to a retail business group in the same city. This business, which is kept in purdah, has been pushed to 100 million users through ele.me, bringing great uncertainty to the slightly quieter market pattern of life services in the post-epidemic era.

In the new round of adjustment, the city retail business group has been divided into two parts, among which, Tmall supermarket business related team and Tmall import and export business group will be merged to form a new "Tmall supermarket and import and export business group"; while the same city retail business group will retain Amoy Xianda and the new local life retail team, which will continue to be in charge of Li Yonghe.

If Wang Lei's mission is to lead ele.me to complete the integration, running-in and positioning transformation within Ali, thenThe arrival of Li Yonghe means that ele.me will fight for retail in the same city as the main force.

Ali pointed out that the rendezvous of ele.me with Gao de and Fei Zhu, as well as future access to retail in the same city, not only reflects Ali's determination and layout in the "new service". Ele.me is also getting closer and closer to Zhang Yong's goal of becoming a "local life service portal".

The reason why ele.me is able to accept retail in the same city, and assume the important task of Ali's follow-up growth mission, mainly comes from two major advantages: the import value of immediate consumption, and the ability of offline rapid implementation.

Zhuang Shuai, founder of Bailian Consulting, believes that the purpose of Ali's organizational structure adjustment is to further strengthen and enhance the local life business and enhance competitiveness and innovation through integration.

But only by adjusting the organizational structure, Ali's local life business is also difficult to coordinate.

Ali's local life business goes its own way. Ele.me, Fei Pig and Gao de are all parallel businesses, so the synergy effect will be relatively weak, or even unable to work together. Meituan is under the unified management of Wang Xing, and the business is integrated and developed. " Zhuang Shuai pointed out that the fact that the business is too scattered is actually an important reason why Ali's local life business currently lags behind Meituan.