Alibaba Merges Ele.me, Fliggy Units into Core E-commerce Business

Chinese e-commerce giant Alibaba integrates food delivery and travel units to streamline operations amid fierce digital retail competition

Three Key Facts

• Alibaba consolidates core operations by integrating food delivery platform Ele.me and travel unit Fliggy into its main e-commerce business, marking a strategic shift from pure e-commerce to a comprehensive consumer platform.
• 10 billion yuan subsidy commitment from both Alibaba’s Ele.me and JD.com’s JD Takeaway as Chinese e-commerce giants escalate their battle for instant retail market share with 30-60 minute delivery services.
• Domestic e-commerce generates approx. 44% of revenue with over 414 billion yuan (≈ $57,6 Billion) from Alibaba’s 941 billion yuan (≈ $131 Billion) total turnover in the financial year ending March 2024, highlighting the strategic importance of this consolidation.

Introduction

Alibaba transforms its business structure by merging two major subsidiaries into its core e-commerce operations, signaling a fundamental shift in China’s competitive landscape. The integration of food delivery platform Ele.me and online travel agency Fliggy into Alibaba’s primary e-commerce unit represents the company’s most significant reorganization since its historic division into six separate units 20 months ago.

CEO Eddie Wu Yongming announced the consolidation in an internal email, stating the company will “increasingly optimise our business models and organisational structures from the user’s perspective to create richer, higher-quality consumer experiences.” This strategic pivot positions Alibaba to compete more effectively in China’s intensifying instant retail market while maximizing cross-selling opportunities across its ecosystem.

Key Developments

The restructuring creates a unified Alibaba E-commerce Business Group that combines domestic platforms Taobao and Tmall with international operations under Alibaba International Digital Commerce. Fan Jiang, previously CEO of the international division, leads the expanded business unit as chief executive.

Ele.me CEO Fan Yu and Fliggy CEO Zhuang Zhuoran now report directly to Jiang Fan, who oversees the integrated e-commerce operations. Both platforms retain their current leadership structures to ensure operational continuity during the transition.

The consolidation follows Alibaba’s aggressive expansion into instant retail through Taobao Flash, a one-hour delivery service now operating in over 50 cities. This service leverages Ele.me’s logistics network to provide 30-minute delivery for products ranging from groceries to electronics, directly challenging competitors in the fast-growing quick commerce sector.

Market Impact

Chinese e-commerce giants intensify their competition through substantial financial commitments to instant retail. Both Ele.me and JD.com’s JD Takeaway pledged 10 billion yuan in consumer subsidies, with JD specifying a one-year investment timeline while Ele.me’s timeframe remains undisclosed.

The subsidy war creates immediate benefits for consumers, with JD Takeaway offering discounts up to 20 yuan at major restaurant chains including McDonald’s and Haidilao. Taobao’s instant shopping platform provides 11 yuan discounts on orders exceeding 15 yuan, demonstrating the aggressive pricing strategies employed to capture market share.

Industry analysts describe the current landscape as a “triopoly” between Alibaba, Meituan, and JD.com in instant commerce. The competition has created challenges for profitability as companies prioritize market share over margins in this cash-intensive sector.

Strategic Insights

The consolidation addresses Alibaba’s need to streamline operations while competing against specialized players like market leader Meituan in food delivery. By integrating high-frequency services like food delivery with its core e-commerce platforms, Alibaba creates opportunities to drive lower-frequency, higher-margin purchases in categories like clothing and electronics.

This reorganization eliminates internal silos and reduces overlapping costs between previously separate business units. Ele.me was formerly grouped with mapping service Amap under the Local Services Group, while Fliggy operated independently, creating operational inefficiencies that the new structure addresses.

The move positions Alibaba to better compete with ByteDance’s Douyin, Pinduoduo, and other emerging platforms that challenge traditional e-commerce models. The unified approach allows for shared customer data, logistics networks, and merchant management systems across all consumer-facing services.

Expert Opinions and Data

Wu emphasized the transformation’s scope, noting that “the e-commerce industry in China and around the world is entering a new era, and the global supply chain capabilities, fulfillment capabilities and consumer service capabilities will determine the future competitive landscape.”

Jason Yu, general manager at CTR Market Research, explains the competitive dynamics: “The competition is so intense, there’s not a lot of incremental growth opportunities, so everybody is moving into everybody else’s territories.” This territorial expansion drives the current consolidation strategies across major platforms.

Beijing-based analyst Liu Xingliang highlights the strategic rationale, noting that Alibaba and JD.com leverage “high-frequency demand for food, coffee, and bubble tea to boost lower-frequency demand for clothing, electronics, and other higher-margin purchases.” This cross-selling approach, according to Investing.com, represents a fundamental shift in how Chinese e-commerce companies structure their operations.

Chen Liteng from e-commerce consultancy 100ec.cn describes the market as increasingly concentrated, with three major players dominating instant commerce through subsidies and logistics innovations. The analyst expects intensified competition as each company seeks to establish market dominance in this emerging sector.

Conclusion

Alibaba’s integration of Ele.me and Fliggy into its core e-commerce business represents both defensive positioning and offensive strategy in China’s evolving retail landscape. The consolidation enables operational efficiencies while creating a unified platform for cross-selling across food delivery, travel, and traditional e-commerce services.

The restructuring occurs amid intensifying competition and substantial subsidy commitments that challenge near-term profitability across the instant retail sector. Wu’s vision of “sharing unified objectives and fighting as one” reinforces the e-commerce group’s role as Alibaba’s primary revenue engine, accounting for 41% of the company’s total turnover and positioning it for sustained competition in China’s digital marketplace.