Alibaba ultimately clashed with Meituan

Author | Huang Yu

Editor | Wang Xiaojun

After nearly 5 months of joining the food delivery battle, it is expected that Alibaba will once again strengthen its in-store group buying business, and it has finally arrived.

According to Wall Street News, on September 20, the in-store group buying business of Taobao Flash Sale will be piloted in three cities: Shanghai, Shenzhen, and Jiaxing, with a full rollout to follow. Similar to the food delivery business, the in-store group buying business will also be jointly developed by Taobao Flash Sale and Ele.me, but will launch simultaneously on Taobao, Alipay, and Amap, the three largest traffic portals within the Alibaba ecosystem.

From this point on, Alibaba officially forms a comprehensive "encirclement" against Meituan's core business.

However, Amap, which was pushed into the spotlight by Alibaba 10 days ago, will not become the operating entity for Alibaba's in-store group buying business.

In Alibaba's renewed efforts in the in-store group buying business, Amap's role, besides driving traffic, is also its recently released street ranking, similar to Meituan's Dianping list. This is seen as the first step for Alibaba to launch its in-store group buying business.

The unveiling of this increased focus on the in-store group buying business also officially announces that Alibaba will not use its former platform Koubei, which once supported its in-store business. However, Alibaba has not yet responded to Wall Street News regarding this information.

In fact, it is no secret in the industry that Taobao plans to lay out its in-store group buying business. Wall Street News found that in August, several industry insiders revealed on social media that Taobao Flash Sale would launch the in-store group buying business.

However, a restaurant industry insider told Wall Street News that the original timeline for the group buying launch communicated by Taobao's relevant personnel was earlier, but it was postponed to September 20 for some reasons.

From April 30, when Alibaba upgraded its instant retail business "Xiaoshi Da" under Taotian to "Taobao Flash Sale," to September 10 when Amap released the street ranking, and now to the upcoming launch of the in-store group buying business, Alibaba's layout in local life is becoming increasingly complete.

Clearly, Alibaba's increased focus on the in-store group buying business is an important step in its local life strategy, with the core goal of building a complete ecosystem of "home delivery + in-store," directly targeting Meituan's profit territory and seeking new growth curves for its e-commerce main business.

Amap has fired the first shot for Alibaba's increased focus on the in-store group buying business.

On September 10, the Amap app launched a new feature on its homepage called "Amap Street Ranking," allowing users to comprehensively rate and rank merchants. Currently, the ranking covers various business types, with the top lists including must-try foods, must-visit attractions, and must-stay hotels, while the street ranking includes local shops, local snacks, and more.

According to reports, the biggest feature of the Amap Street Ranking is that it is generated based on 1.3 billion navigations from 51.32 million people over the past year, totaling 22.8 billion kilometers, filtering through 1.18 million stores that users frequently visit, combined with real evaluations calculated by Sesame Credit.

At the same time, Amap has launched the "Good Shop Support Program," encouraging users to consume in-store through measures such as issuing over 1 billion in subsidies At the press conference on the same day, Gaode Map CEO Guo Ning declared: "The Gaode Street Scanning List will never be commercialized; authenticity is the core vitality of the list, and the core goal of the Street Scanning List is to truly reflect users' choices."

Morgan Stanley analysts Gary Yu and Joanne Lau pointed out in a recent research report that the model of the "Gaode Street Scanning List" is highly similar to Meituan's Dianping, and this move is a clear signal that Alibaba is re-energizing its in-store business, which will reshape the competitive landscape of local life services.

So, where does Alibaba's confidence in targeting an industry leader like Meituan come from?

Analysts at Great Wall Securities believe that there is a certain synergy between in-store and home delivery businesses, as merchant resources for in-store and takeaway can be reused. Additionally, the complexity of in-store consumption scenarios is lower than that of takeaway businesses, reducing the fulfillment and delivery process, thus providing a larger profit margin.

Clearly, the achievements made in the takeaway business over the past few months have also boosted Alibaba's confidence in ramping up its in-store business.

At the August earnings conference, Alibaba's China e-commerce business group CEO Jiang Fan elaborated on the Taobao Flash Purchase strategy for the first time, noting that Taobao Flash Purchase has exceeded expectations in terms of order scale, user scale, merchant supply, and logistics capacity. Home delivery orders have already led the industry, and the phased goals of Taobao Flash Purchase in terms of scale and consumer mindset have been exceeded, with long-term industry-leading efficiency expected.

It is reported that in August, the daily order peak for Taobao Flash Purchase reached 120 million orders, with an average order volume of 80 million on Sundays, driving the overall monthly transaction buyer count for Flash Purchase to reach 300 million, a 200% increase compared to April this year.

From the merchant supply side, Jiang Fan revealed that with the rapid growth of business scale, a large number of new merchants have joined Taobao Flash Purchase, especially with high-quality supply reaching industry-leading levels.

For Taobao's core e-commerce business, takeaway is also a good business; the first three weeks of August drove a 25% year-on-year increase in monthly active consumers on the Taobao app.

Jiang Fan expects that in the next three years, with the entry of one million brand stores, Flash Purchase and instant retail will bring an additional transaction volume of 1 trillion yuan to the Taobao platform.

Now, focusing on building a large consumption platform is part of Alibaba Group's strategy to advance alongside "AI + Cloud." As an important piece of the large consumption platform, Alibaba Group's determination to invest in the in-store group buying business is certainly significant.

As Meituan, the defender, extends from takeaway to in-store, it is also actively counterattacking. This century-long battle in local life services may not reach its conclusion anytime soon