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guan leiming

technical director | java

ali local life: a cruel choice in the war of scale

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transformation and challenges:

the organizational change of alibaba local life group marks a new challenge of scale effect. the "1+6+n" organizational structure and the ceo responsibility system under the leadership of the board of directors mean that each business group and business company must bear greater responsibilities and risks. under the new organizational structure, ele.me quickly shifted from an expansion strategy to a "thrifty" strategy of excellence, indicating that they are seeking a way to grow with higher profit margins. however, the competition in the local life market is still fierce. companies such as autonavi and didi have also begun to shrink their market share, but autonavi's profitability still relies on the scale of supply, while meituan has gained a significant competitive advantage through more than 9 million merchants on the platform.

the dilemma of “small and beautiful”:

the reality of the scale effect in the local life market means huge pressure for ele.me. although the takeaway business has a high profit margin, the market competition is fierce and it is difficult to ensure sustained growth. the strategy of "offense to defense" requires rapid cost reduction and efficiency improvement, which may mean stagnation, and the "small and beautiful" model may face challenges.

future outlook:

alibaba local life group needs to make a choice: continue to burn money to strive for greater scale and imagination, or rely on cost reduction to quickly make profits to maintain the speed of development. they need to find a balance and look for new growth points. the local life market is still full of opportunities, but to overcome challenges, new strategies and innovative thinking are needed.

2024-09-19