Alibaba's "Integrated E-commerce Ecosystem" Plan: "Profit Margin Improvement" for Delivery and Flash Purchase, Gaode's "In-store Strategy," Organizational Transformation

Author: Dong Jing

Source: Hard AI

Alibaba is building an integrated e-commerce ecosystem with synergistic effects, improving the profitability of its takeaway and flash purchase businesses through four key drivers, while leveraging the traffic advantages of Amap to enter the local service market.

On September 12, JP Morgan stated in its latest research report that recent investor meeting minutes showed that Alibaba's management outlined a clear path to narrowing losses through operational efficiency optimization, and they are more optimistic about the speed of narrowing investment losses in the coming quarters.

JP Morgan analysts noted that this Chinese e-commerce giant is integrating multiple businesses such as e-commerce, takeaway, and travel through loyalty programs like the "Taobao Big Member System," achieving cross-scenario consumption synergy, which is to build an "integrated e-commerce ecosystem," and entering the in-store service market through the 170 million daily active users advantage of Amap.

The report also pointed out that Alibaba's management emphasized enhancing execution capability through organizational streamlining and mobilizing internal resources around core strategies. Under the leadership of executives like Jiang Fan, they are cultivating entrepreneurial leadership talent and achieving agile responses through a younger senior management team.

JP Morgan maintains an "Overweight" rating on Alibaba, with a target price of HKD 165 for Hong Kong stocks and USD 170 for U.S. stocks. The analysts believe that streamlined operations, strong financial resources, and a clear flash purchase and cloud strategy will bring sustainable double-digit profit growth.

Four Key Drivers of Takeaway and Flash Purchase: Transformation Path from Loss to Profit

The report states that Alibaba's management detailed the four key drivers for improving the profitability of takeaway and flash purchase businesses at the investor meeting.

First is user structure optimization, supported by strong new user retention rates, focusing on increasing the proportion of repeat customers to enhance retention and lifetime value.

Order structure optimization is the second key driver. By introducing more Tmall brand merchants to the flash purchase platform, the GMV proportion of low-margin categories like milk tea is reduced.

According to the investor meeting minutes released by JP Morgan, the current single order proportion of the milk tea category is less than 30%, and Alibaba is transitioning towards diversification of high-value products.

Improvement in fulfillment efficiency relies on a network of 2 million delivery riders and optimizing delivery costs in high-density urban areas.

Enhancement of monetization capability utilizes the large number of users attracted by the flash purchase platform to achieve commercialization through rapidly growing traffic.

JP Morgan believes that this systematic improvement strategy aims to narrow losses in this business through operational efficiency optimization in the coming quarters, providing new momentum for Alibaba's overall profit growth.

"Taobao Big Member System": Building an Ecological Closed Loop for Cross-Business Synergy

JP Morgan pointed out that Alibaba's "Taobao Big Member System," as a foundational loyalty program, covers multiple domestic businesses including e-commerce, takeaway, and travel. Users accumulate "Taobao Points" through cross-scenario consumption and interaction, which determines their membership level.

The core value of this system lies in allowing consumers to accumulate levels through their daily behaviors within the entire Alibaba ecosystem, unlocking high-value rewards. From e-commerce and local life to travel, every consumption by users can lead to level upgrades Reaching a higher VIP membership level is key to unlocking the eligibility for 88VIP premium membership at a significant discount, serving as a pathway to a broader range of exclusive privileges.

JP Morgan believes that this design allows Alibaba to flexibly adjust the investment intensity of individual businesses, as natural synergies between businesses can be achieved through multi-dimensional consumer value propositions.

The Minutes indicate that Alibaba's management emphasized that although individual businesses like food delivery may face investment pressures, the overall synergistic growth strategy of the ecosystem enables the company to maintain flexibility in competition.

Amap: 170 million daily active users tapping into the local service market

Research reports state that Amap, as Alibaba's mobile map service with 170 million daily active users and 1 billion monthly active users, has become a natural entry point into China's in-store and local service market.

Since mobile maps are at the top of the local service traffic funnel, and the profit pool of the local service industry is much smaller than that of e-commerce, the investment intensity for this business will be lower than that of food delivery and flash purchase businesses.

Amap's monetization opportunities include advertising, coupons, and integrated services like ride-hailing. By 2025, Amap has accelerated this strategy through AI feature upgrades, utilizing artificial intelligence technology to enhance user experience and service efficiency.

This strategic positioning allows Amap to gain significant traffic entry into the local service market with relatively low investment intensity. Compared to heavy asset investment businesses like food delivery, Amap's in-store strategy offers a more cost-effective advantage.

JP Morgan believes that Amap's user base and technological advantages provide Alibaba with a differentiated competitive edge in the local lifestyle service sector, potentially becoming a new growth engine.

Organizational Change: Nearly half of partners reduced, management team rejuvenated

Alibaba's management emphasizes enhancing execution capability through organizational streamlining and mobilizing internal resources around core strategies. Under the leadership of executives like Jiang Fan, Alibaba is cultivating entrepreneurial leadership talent to reignite organizational vitality.

The number of partners has been reduced by nearly half in the fiscal year 2025, reflecting Alibaba's management philosophy of "simplifying complexity." The rejuvenation of the senior management team and mid-level management aims to improve decision-making efficiency and execution capability.

JP Morgan states that this organizational restructuring supports the group in achieving agile responses in a competitive environment. By streamlining the decision-making chain, Alibaba can respond more quickly to market changes and consumer demands.

According to JP Morgan analysts, this series of organizational changes helps Alibaba maintain consistency and efficiency in strategic execution while building an "integrated e-commerce ecosystem."