Temu and Shein's Pressure: How is Alibaba responding?
Alibaba's Global Vision: Lazada & Daraz Integration and AIDC's New 2024 Playbook
Compared to Alibaba's International Digital Commerce Group (AIDC), which began expanding into cross-border e-commerce with AliExpress in 2010, platforms like Temu, TikTok, and Shein are definitely latecomers. However, the rapid rise of these platforms makes AIDC's pace seem rather slow.
Li Yongjian, a researcher at the Chinese Academy of Social Sciences, pointed out in an interview that Alibaba's international business wasn't going as planned. It wasn't until 2023 that the company began to ramp up its international expansion efforts significantly.
AIDC now include two domestic cross-border platforms: AliExpress and Alibaba.com and four overseas platforms: Lazada in Southeast Asia, Miravia in Spain, Trendyol in Turkey, and Daraz in South Asia.
To keep up with Shein and Temu, Alibaba is working at full stretch: streamlining operations to cut costs and improve efficiency, bringing in local talent alongside Chinese e-commerce expertise, strengthening its B2B growth, and investing heavily in advertising with celebrity endorsements and sports partnerships to increase global visibility.
The Merger of Lazada and Daraz
On August 29, at the Lazada and Daraz merchants' meeting, the two platforms announced that they're teaming up. Now, if you're a seller, you can pick Lazada or Daraz to open your shop and instantly start selling in nine big markets, including the Philippines, Malaysia, Singapore, Thailand, Vietnam, Pakistan, Bangladesh, Sri Lanka, and Nepal.
The platforms are also making it easier for sellers by simplifying store setup, backend operations, promotion events, traffic strategies, and logistics services to boost operational efficiency for merchants.
Now, sellers can manage both Lazada and Daraz with the support of a single account manager. "With just 2-3 people, you can effectively run your business on both platforms," said a Daraz representative. Moreover, Lazada's LazMall brands can easily launch their Daraz Mall storefront, gaining access to exclusive traffic, operational support, and subsidies.
To make it easier for sellers, Lazada and Daraz have synchronized their major promotional events, such as 11.11, 12.12, and Payday sales. By July, the Daraz app had been redesigned to match Lazada's interface.
In logistics, Lazada and Daraz now share sorting centers, allowing orders that qualify for Lazada's pickup service to include Daraz orders as well, cutting down on shipping costs.
There were early hints that Alibaba was planning to integrate Lazada and Daraz.
On January 24, 2024, Daraz announced that its board had appointed James Dong, CEO of Lazada, as acting CEO of Daraz, replacing Bjarke Mikkelsen. Dong has been with Lazada since 2018 and became CEO in 2022. Before that, he held key roles at Alibaba, including being Daniel Zhang's business assistant and running Lazada in Thailand, Vietnam, and Indonesia.
This appointment serves as a microcosm of Alibaba's global staffing strategy, wherein the core team of Alibaba International is comprised of both local talent and Chinese e-commerce experts.
For example, at Lazada, under James Dong's leadership, Wei Meng leads the user product division after previously running Taobao's shopping section. Chen Xi, former GM of Tmall's FMCG unit, now heads Lazada's brand and SME operations.
Outside Lazada's HQ, each country in Southeast Asia has its own CEO. Thailand and Malaysia are led by Pomme and Kaya, both women, while Indonesia and the Philippines are managed by long-time Lazada leaders James Chang and Carlos. Victor, former COO of Indonesia, now heads Vietnam.
The board emphasized that Daraz and Lazada, as sibling companies in South and Southeast Asia, have long benefited from close collaboration. Appointing James Dong as Daraz's acting CEO is a step to ensure the company's long-term success. The board expects Dong to help the two companies collaborate even more.
Daraz founder Bjarke Mikkelsen mentioned that the new CEO will work towards integrating Daraz more closely with other companies under AIDC, aiming to streamline the strategy and improve the efficiency.
What's New about AIDC
As Shein and Temu continue their rapid expansion, Alibaba has been actively working on advancing its international business. With a complex structure, Alibaba's global operations have been streamlined by Jiang Fan, who set a "cross-border + local" approach as the main strategy. This involves two domestic cross-border platforms, AliExpress and Alibaba.com, and four overseas local platforms, including Lazada in Southeast Asia, Miravia in Spain, Trendyol in Turkey, and Daraz in South Asia.
Beyond integrating Lazada and Daraz, AIDC CEO Jiang Fan also merged AliExpress and Lazada teams, consolidating all cross-border functions under AliExpress while Lazada focuses on local e-commerce in various markets. Additionally, AliExpress's European teams were partly transferred to Lazada, enhancing its supply of cross-border merchants.
While for Alibaba.com, this year is all about AI and semi-managed services. Early in the year, Alibaba.com introduced the semi-managed model, with the goal of improving efficiency, optimizing supply chains, and helping sellers tap into new overseas markets. Since last September, Alibaba.com has been rolling out localized services tailored to different countries. Southeast Asia was the first to benefit, followed by Europe in late October.
The platform has also revamped its model by adding finance, logistics, and digital SaaS solutions on top of transactions to ensure sustainable B2B growth. Last year, the platform's B2B export volume reached $350 billion, with $50 billion in online sales. In January and February this year, both GMV and opportunities on the platform have kept growing fast.
AIDC is taking a page out of Temu's growth strategy. Once known for minimal marketing efforts, AliExpress has begun spending heavily. On April 15, they named actress Tang Wei as their Korean market ambassador, followed by football icon David Beckham as their global brand ambassador on May 27.
By June 5, Alibaba.com had become the official B2B e-commerce partner for Euro 2024. In July, with the Paris Olympics approaching, Alibaba.com brought on NBA legend Tony Parker as its brand ambassador. As the official e-commerce partner for the Paris Olympics, they launched several events, investing heavily to help Chinese sellers tap into the massive Olympic audience.
On August 15, during Alibaba's earnings call, AIDC CEO Jiang Fan highlighted their current focus: improving operational efficiency and boosting profitability in certain areas while investing strategically in key markets.