Article | "China Entrepreneur" reporter Wang Xueqi
Editing | Ma Yue
"It used to be a cooperation between relatives, now it is a cooperation with brothers and sisters." Zhong Xianwen, vice president of Ele.me, made such an analogy about the relationship between Ele.me and other departments of Alibaba. In April this year, Alibaba announced a full acquisition of Ele.me at a valuation of $9.50 billion. Previously, Alibaba and Ant Financial already owned 43% of Ele.me. Zhong Xianwen is a veteran of Ele.me and is currently responsible for traffic and user operations related to the Ele.me APP.
Before the acquisition, Ele.me had already begun to cooperate with various applications under Ali, and had cooperated with Taobao Ticket, and the Alipay interface had also been established. In Zhong Xianwen’s opinion, the relative cooperation was still based on the business model of rights replacement. After becoming a family, the efficiency of cooperation and communication improved a lot.
In the past five months, Ele.me has undergone changes, some of which are visible and some of which are hidden behind the scenes.
After Ele.me acquired Baidu takeaway in August last year, the takeaway market officially formed a situation where Ele.me and Meituan were divided. But Ele.me’s market share was not satisfactory. According to the "China Mobile Internet Industry Analysis and Development Report for the First Half of 2018" released by Trustdata big data, Meituan, Ele.me, and Baidu takeaway accounted for 59%, 36%, and 3% of the transaction volume in the takeaway market, respectively. Lack of traffic is considered to be the main reason why Ele.me is at a disadvantage.
This summer, Ele.me CEO Wang Lei told Reuters that he would invest 3 billion yuan between July and September, aiming to increase the market share to more than 50%. At the same time, Ele.me has also become an important player in the two major projects of World Cup marketing and 88VIP, which have linked multiple departments of Ali.
In August, Ali disclosed the establishment of a holding company in the second quarter of 2018. The company has two major businesses, Ele.me and Koubei, and will serve as the flagship of local life services in the future. It has received investment commitments of more than $3 billion from investors such as Alibaba and SoftBank Group.
Inside Ele.me, the model of "small front desk, big middle desk" has been promoted, and Ali-style transformation has been carried out from the organizational structure level. Ele.me is establishing a two-way empower relationship with Ali. On the one hand, Ali’s new retail stores are actively connected to the Hummingbird distribution system to improve their own capacity level. On the other hand, Ele.me connects to Ali’s handao and other super applications to obtain traffic empower.
All the changes are sending a signal that Ele.me is actively looking for various poses to integrate with Ali.
Since its establishment in 2008, Ele.me has spent its first decade fighting alone and exploring the market, with a cliff behind it and only a path forward. At the beginning of the second decade, this unicorn that grew up in the jungle of extensive growth has to learn how to integrate into a giant with its own system and complete methodology. This may be a story from the jungle to the city.
"It’s more tiring than starting a business," Xiong Bin, vice president of new retail at Ele.me, describes his current job status.
Xiong Bin (left), Vice President of Ele.me, Zhong Xianwen (right), Vice President of Ele.me. Source: Photo provided by the interviewee
Xiong Bin is an Ali veteran. After joining Alibaba in 2002, he went through B2B, Taobao, Taodiandian and other departments. He left Alibaba in 2015 and chose to start a business in the local life service field. Ali’s acquisition of Ele.me made him decide to sell his company and return to Ele.me with his team for a second venture.
In Xiong Bin’s eyes, in the past few years, the local life service market was still in a state of savage growth, and everyone was actively expanding. "Everyone is competing with who has the fastest financing, who has the most savage war, and can quickly complete urban expansion."
In 2014 and 2015, large and small giants have successively flooded into the O2O takeaway market. For a period of time, there were as many as a dozen takeaway platforms, competing to subsidize and burn money to compete for users. The takeaway market has encountered frequent problems in the process of brutal growth. Many platforms have removed unqualified merchants due to the lack of relevant catering qualifications.
With the acquisition of Baidu takeout by Ele.me and the merger of Meituan and Dianping, the once-blank market has been divided up by several giants and has begun to enter the era of intensive cultivation. "In the past, we emphasized how many resources to give in the local living market, how many cities to open, and how many businesses to expand. Now the focus is on using an overall plan to connect all levels of logistics, marketing, and membership to improve the user experience," Xiong Bin said.
In the era of intensive farming, user experience is placed in an increasingly important position. Compared with other sectors of Ali’s new retail, Ele.me’s hummingbird distribution system is a very important supplement to the offline scene. According to a city manager in East China of Ele.me, after the completion of the acquisition, Ele.me has invested more and more energy in the logistics side, and the company has repeatedly emphasized the need to form a closed loop between Ali’s new retail stores and Ele.me logistics.
Delivery speed has a significant impact on the experience of e-commerce users. From the first seven days of arrival to the 211 time limit proposed by JD.com, the upgrade of delivery speed is also accompanied by the improvement of user experience. However, the transformation of logistics capacity is time-consuming and labor-intensive, not a day’s work. Zhong Xianwen said that the standard of Hummingbird delivery is 30 minutes. If the merchant of Tmall and Taobao completes the connection in the future, it will bring important empowerment to the latter.
After the acquisition was completed, Hummingbird Distribution quickly connected with other business departments, connected to RT-Mart Supermarket’s order delivery in June, and cooperated with Retail and Ali Health in July to provide 24-hour local timely delivery services.
In the proposition of improving user experience, Meituan, the biggest competitor of Ele.me, is also not slack. In February this year, Meituan cooperated with Heilan Home to use a 1-hour timely delivery service. In July, it launched a flash sale business, striving to achieve 30-minute door-to-door delivery in categories such as supermarket fruits and vegetables.
But Xiong Bin disagrees, saying that the exploration in the field of clothing should not start from sales, but first establish scenarios such as mobile fitting that can really improve the user experience, "rather than doing gimmicks". In the face of the flash sale attack, Ali’s new retail business is also combining with the local life service business of Ele.me. "We like to see that the opponent has these business layouts, and after they do it, many merchants are also queuing up to cooperate with us."
Regarding the competition between Ele.me and Meituan, Zhang Yong once joked when acquiring Ele.me: Meituan is playing the second floor on Ele.me, and with Ali’s blessing, Ele.me is playing the second floor on Meituan.
However, Ele.me has Ali, Meituan also stands behind Tencent, 6th floor and 2nd floor, which may not be accurate. Xiong Bin bluntly said that he will keep an eye on the connection and empowerment between Tencent and Meituan, but the relationship between Ali and Ele.me can be said to be in harmony. In terms of closeness, Meituan is far inferior to Tencent, and Ali’s accumulation in the new retail field is also more profound. Xiong Bin said that he has set a very high KPI for himself, and smooth integration is the guarantee for the completion of this KPI.
The number of floors may be controversial, but Ele.me does stand taller than it did before it was acquired.
"In the past, when we fought with Meituan, Ele.me suffered the most because the other party fought in groups, and we fought alone, and one person could not beat ten people." Zhong Xianwen said so. As the person in charge of user operations, his anxiety was relieved by the arrival of helpers. Survival anxiety was relieved, and he thought more long-term about the business, focusing more on the nature of business.
From the cliff behind him to Ali behind him, Ele.me began to face new questions about how to better integrate into Ali.
Ele.me needs traffic, Ali has traffic, Alipay, Taobao, Youku, each of which is a large traffic user. The problem lies in the transmission of traffic.
In the past year, Zhong Xianwen has completed two major projects, connecting Ele.me to Alipay and Taobao. In the summer of 2017, Ele.me began to connect with Alipay, and in mid-October it was officially connected to Alipay. The "takeaway" icon on the Alipay page has also changed to "Ele.me takeaway".
Only with the interface, traffic did not flow in, because the user’s mind had not changed. For users, Alipay is a payment tool and a financial tool, and it is difficult to immediately form the habit of ordering takeout here. In order to change users’ usage habits, Zhong Xianwen and the team tried many methods, "to constantly adjust the posture and find the best entry point". After the team found that the "hard access" with only the interface and no operation was obviously not working, they began to consider the "soft access" method of leveraging users with marketing activities.
In early December, Ele.me and Alipay launched the "Alipay Takeaway Festival" activity, mobilizing millions of merchants to launch discount activities. In order to leverage the resources of merchants and Alipay, the operation team used the narrative of "opening a branch". Ele.me opened a branch in Alipay, and the opening promotion of the new store was reasonable. After the takeaway festival, the order volume generated by Ele.me on the Alipay interface increased by 300% compared with a month and a half ago.
In August this year, Ele.me officially connected to the mobile phone Taobao. Zhong Xianwen said that the consumption habits of handmade Amoy users are non-instant consumption, which is completely different from the takeaway consumption model. The operation team has tried a variety of access solutions, and there will be activities launched during Double Eleven, but it is not convenient to disclose for the time being.
Externally, it is necessary to change the user’s mindset, and internally, it is also necessary to adjust the operation concept according to the characteristics of the cooperation department.
"Alipay is a service, handshopping is a seller, and the business form is different, and the integration mode is also different." Zhong Xianwen further explained that Alipay regards Ele.me as a super large merchant, and the interface is also listed under the label of "third-party service". But Taobao, which is dominated by e-commerce genes, sees the merchants behind Ele.me, and wants to directly introduce merchants into the Taobao system.
Zhong Xianwen pointed out that finding the best entry point with Taobao needs to give Ele.me a stronger "goods" attribute. "For example, we can make a group buying coupon for a certain hamburger from KFC and sell it on Taobao, and the hamburger will become goods. This kind of thinking is not easy to understand when placed on Alipay."
In addition to the system that is more biased towards the underlying construction, there is another more direct way to empower traffic, the membership system.
On August 8 this year, Alibaba launched 88VIP membership. Super members with a naughty value higher than 1000 can spend 88 yuan in annual membership fees and receive membership benefits in multiple business categories under Alibaba, such as Ele.me Super Member and Youku VIP Member.
For Ele.me, the opening up of the membership system means that it can provide users with more accurate products and services.
Since Alibaba acquired Ele.me, almost everyone interviewed has mentioned the high degree of convergence in corporate culture between Ele.me and Alibaba.
"Ele.me is particularly hard-working and aggressive, like a young version of Ali. The average age of the employees is only 27 years old. When we joined Alibaba, the average age was about the same." Xiong Bin said that after coming to Ele.me, the pace of work is faster than when he started his own business. Sometimes after a meeting with the team at 6 or 7 pm, he received a plan early the next morning.
Under the premise of cultural convergence, Ali’s first task in transforming Ele.me was to transform the guerrillas into a regular army.
Xiong Bin implemented the organizational structure of Ali’s "large, medium and small front desk" in the Ele.me new retail department, and horizontally connected functional sectors such as data analytics to form a model of large, medium and small front desk. The front desk goes to the front line as an independent unit to fight, and the middle desk provides a complete system. "Ele.me used to talk about rapid innovation, and this process requires the establishment of a relatively independent organization, but it may affect the efficiency. Now integrate all these independent organizations, and it can adapt to the entire process of ecological integration."
Alibaba has also introduced new methodologies, such as a cross-team project management approach based on the three elements of "goals, strategy, and resources". This methodology is designed to enable employees to develop a consistent and comprehensive way of thinking when facing specific projects.
When asked whether these changes will affect Ele.me’s innovation ability, Xiong Bin responded that since the transformation, the innovation efficiency is at least not slow, and the response to market changes is not lagging behind. After the technology department is connected, some products do not need to be developed repeatedly, but the efficiency of the bottom layer has been improved.
In all kinds of internal and external changes, personnel stability is particularly important. When the acquisition was just completed, the chief human resources officer from Ali was worried that there would be a large-scale departure. But the situation was the opposite. Not many Ele.me employees chose to leave, but many Ali employees wanted to come. They felt that this was a brand new business with a lot of room for development. "Instead, we have to have some control over this matter. Most of the Ali employees who come here are responsible for communication and bridging between the two sides."