Alibaba is a major online retail company founded in 1999 by Jack Ma in his apartment in Hangzhou, China. It has become one of the biggest e-commerce platforms that deliver goods and services worldwide.
The Chinese digital company decided to split into six units. With this move, every company will have its CEO and board of directors and be eligible for an Initial Public Offering.
The company’s former CEO, Jack Ma, suddenly resurfaced in China after a year-long absence. The six units of the Alibaba Group of Companies are:
1. Global Digital Commerce
This division will oversee the e-commerce marketplaces such as AliExpress and Lazada.
2. Digital Media and Entertainment
This unit will bring together various media parts of the company, such as Alibaba Pictures, the film production unit, and Youku, the video streaming platform.
3. Cainiao Smart Logistics
This unit was founded in 2013 by Alibaba and is now the most significant logistics company in China, serving both Alibaba and third-party clients.
4. Cloud Intelligence
The cloud computing unit (Aliyun) currently has over 35% of the Chinese cloud computing market.
5. Local Services
This division will serve food and grocery delivery services like Ele. me and Amap (a mapping app).
6. Taobao MALL Commerce
It will serve its Chinese customers with cutting-edge e-commerce tech products and services. Currently, they make up about two-thirds of the total revenue.
The new division will unlock value for shareholders that have invested in companies, as the value of the shares has increased over 15% since the announcement of the split.
Another advantage of this split is how big and powerful the Alibaba conglomerate has become. The cloud intelligence unit, one of the new units in this division, generated 11 billion dollars in revenue in 2022. According to reports by McKinsey, cloud computing as an industry will triple by 2025. With this split, the cloud intelligence division can concentrate on growth and development, which over the next few years will help it compete with AWS and Microsoft Azure, which are already giants in the cloud computing market.
As this split has many advantages, there can also be downsides, as these units now look like smaller businesses in a fast-growing market. They will need to fight their way up to compete with larger companies, depending on the degree to which this unit shares data and ideas to grow separately and together.
Alibaba has become a household name in the e-commerce industry, going tail-to-tail with giants like Amazon. With this split, can they still be a dominant company in the e-commerce services market? Can Jumia Nigeria go head-to-head with any of the new companies?
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Photo By Alibaba
