Rumors that Alibaba is considering Yintai Commerce have sparked a lot of discussion, which seems to reveal the e-commerce giant's rethinking of its new retail strategy. If true, the rumors would mark a shift from Daniel Zhang's offline expansion to a strategic contraction under Wu Yongming to focus more on its core e-commerce and cloud services businesses.
Alibaba's new retail dream began with its investment in Yintai in 2014 and ended with its wholly-owned holding in 2017. Along the way, Yintai has not only introduced many brands to Tmall, but also brought considerable revenue growth to Alibaba financially. However, with the increase in the penetration rate of e-commerce, the return rate of traditional department stores is gradually lower than expected, and the operating pressure is increasing. In addition, the rise of emerging e-commerce platforms such as Pinduoduo and Douyin e-commerce has undoubtedly brought more competitive pressure to Alibaba.
In this context, Alibaba's strategic focus has shifted significantly. Wu Yongming's Ali is more inclined to an asset-light and efficient operation model. **Yintai, in part, is designed to allow Alibaba to travel lighter and focus on its main e-commerce business and cloud computing services, which are seen as the group's strategic priorities.
Although Yintai was once an important part of Alibaba's new retail strategy, its value is not as good as it used to be in the current market environment. A number of analysts pointed out that Alibaba's new retail and unbounded retail strategies have not completely failed, but they have also failed to achieve the expected success. Now, Alibaba needs to adjust its strategy to adapt to the changing market and competitive landscape.
From the perspective of investment strategy, Alibaba's asset-heavy and operation-heavy operation model is in stark contrast to Tencent's asset-light and equity investment strategy. Under the dual pressure of financial pressure and the deterioration of the external environment, Ali's change seems to be a last resort.
Ultimately, the fate of Yintai and Alibaba's strategic adjustment will depend on the market's reaction and the assessment of potential buyers. In the overall downturn of the brick-and-mortar department store industry, it remains to be seen whether Yintai will be able to find a suitable receiver and whether the deal will be successfully completed. For Ali, this may be a difficult "broken arm survival", but for its long-term development, it may be a necessary medicine.