Since its inception, Alibaba (09988.HK) has navigated its way through several pivotal moments, steering its vast ship in the right direction more often than notAs the Alibaba ecosystem spreads into an increasing number of fields, the decisions made over the years cannot simply be categorized as right or wrongIn the early stages, Alibaba's investments were primarily financial, focusing on notable ventures like Yahoo China, Koubei, and Wanwang, seeking corresponding returns on investments.

However, in 2013, Alibaba's investment philosophy underwent a significant transformation, shifting towards strategic investmentsJack Ma openly stated that the future of Alibaba would be attributed to enhancing competitiveness through mergers and acquisitionsThis shift heralded a new era for Alibaba, one where the company's external investments began to expand, aiming to build an integrated ecosystem.

Today, Alibaba has branched into various sectors, including local services, entertainment, and new retail, with much of this growth stemming from the investments made during this transformative period

At that time, Alibaba expressed tremendous ambition, striving to infiltrate every aspect of daily life, from online platforms to physical stores.

However, in the last couple of years, Alibaba has observed frequent shifts in its business and personnel, an unusual occurrence in its 20-plus years of historyThese changes have unveiled numerous challenges facing the company, along with strategic ambiguities.

Looking specifically at its core e-commerce business, Alibaba finds itself at a crossroads, besieged by fierce competitionFour years ago, a public relations crisis caused the fall from grace of “Alibaba’s crown prince,” Jiang Fan, who not only lost his place on Alibaba's partners list but was also stripped of his control over Tmall and Taobao in 2022, being reassigned to international ventures abroad.

During Jiang Fan’s absence, Taobao and Tmall struggled to cope with the rise of competitors such as Pinduoduo and Douyin e-commerce, appearing increasingly helpless in the face of these emergent forces

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Financially speaking, after reaching a revenue peak of 575.993 billion yuan in the 2022 fiscal year (from April 2021 to March 2022), Taobao and Tmall fell into a contraction phase, dwindling to 434.893 billion yuan in the 2024 fiscal year, reflecting a compound annual growth rate of -13.11%. During this timeline, their contribution to Alibaba's overall revenue dropped from 69.48% to 46.21%.

On the profitability front, from the 2022 fiscal year to the 2024 fiscal year, Taobao and Tmall managed to grow their adjusted EBITA from 182.114 billion yuan to 194.827 billion yuan, with a compound annual growth rate of 3.43%. Yet, during the mid-2025 fiscal year, which ended on September 30, 2024, the revenue continued its downward trend, with year-on-year drops of 0.11%, bringing in 212.367 billion yuan, and adjusted EBITA also saw a decrease of 3.11%, down to 93.400 billion yuan.

Comparatively, Pinduoduo showed rapid growth during the same period

From 2021 to 2023, its revenue climbed from 93.950 billion yuan to 247.639 billion yuan, achieving a remarkable compound growth rate of 62.35%. Its net profit soared from 7.769 billion yuan to 60.027 billion yuan, with an astronomical compound growth rate of 177.97%. Alibaba’s position has flipped from being a market leader to becoming a "runner striving to catch up" in this fierce competitive landscape.

Faced with the continuously slowing growth of its e-commerce sector, Alibaba announced the establishment of an E-commerce Business Group in November 2024, fully integrating Taobao and Tmall with Alibaba's international digital commerce group and other e-commerce operations, covering the entire domestic and international e-commerce value chainJiang Fan marked his return as the CEO of this group, reporting directly to Alibaba’s CEO, Wu Yongming.

This restructuring follows Alibaba’s significant organizational overhaul in 2023, which resulted in the “1+6+N” structure wherein Alibaba Group will serve as the core, leading six different business groups and multiple subsidiaries

The approach has shifted towards independent accountability under respective boards.

The creation of the E-commerce Business Group also signals another round of organizational change, intended to tackle the rising trend of cross-border e-commerce platforms like Temu and Douyin's TikTokIn less than three years, Jiang Fan's experience in tapping into overseas markets positioned him as the best candidate to lead this effort.

In the mid-2025 fiscal report, the international digital commerce group achieved a year-on-year revenue growth of 30.73%, reaching 60.965 billion yuan, surpassing the cloud intelligence segment to become the second-highest revenue contributor among Alibaba's six major operations.

However, the difficulties faced by Alibaba today extend beyond its core e-commerce operationsVarious businesses acquired through significant investments have been ruthlessly crushed by competitors, transitioning from peak to mediocrity.

In the sector of big entertainment, the challenges have been no less daunting

Despite considerable investments since 2014 in film, music, literature, and games, Alibaba's entertainment arm has consistently struggled to make a lasting impact, akin to a “difficult-to-nurture child.” Even with financial support inundated upon it, growth has remained elusive.

Under the auspices of the “Alibaba Entertainment” segment, launched in 2016, the company initially thrived with a compelling range of platforms like Youku Tudou, UC Browser, Alibaba Pictures, and others, instarding confidence among industry peersYet, as time has progressed, the division’s influence has waned, now left with only Youku, Alibaba Pictures, and Damai as its mainstay while most other ventures have been folded into innovation business lines.

Over the past eight fiscal years, the entertainment sector accumulated adjusted EBITA losses nearing 60 billion yuan, with a staggering loss of 15.796 billion yuan recorded in the fiscal year 2019 alone

While in the 2025 fiscal year the losses diminished slightly, the sector continues its challenging climb upwards.

The recalibrated entertainment arm expressed frustrations regarding its gaming subsidiary Lingxi Interactive Entertainment, revealing a gap in its internal culture and spirit, exacerbated by a decline in market competitiveness after separation from the parent group.

In this context, Lingxi Interactive, originally acquired by Alibaba in 2017 for 1 billion yuan, was transitioned into an independent operating unit but returned to being overseen by Alibaba entertainment in early 2024. Interestingly, despite the proclamations of disunity, Lingxi Interactive has demonstrated commendable achievements, ranking as the fifth highest revenue-generating mobile game publisher in China as of November 2024.

Looking ahead, with ambitious projections from former head Fan Luyuan, there are aspirations to position Lingxi as the third largest gaming entity in China within five years and as the second within twelve years

However, whether or not such ambitions can be realized remains to be seen.

In contrast to Lingxi’s potential prospects, other ventures like Youku faced immense challengesThough once a dominant player in online video, Youku's shift from user-generated content (UGC) to a reliance on licensed content has seen it struggle against competitors like iQIYI and Tencent VideoAs of late 2024, Youku ranked last among the top five video streaming platforms in China in terms of monthly active users, a perplexing decline from its once lofty position.

The once-prominent Xiami Music, a pioneer in digital music in China, similarly faced decline over timeAfter being acquired by Alibaba, the platform failed to capitalize on the momentum it garnered during its heyday, ultimately falling behind rival platforms and being abandoned as an “orphaned child” in the midst of fierce competition.

Amidst the multifaceted crises, niches like new retail have also experienced setbacks

Over the past two years, Alibaba's fervent investment approach has shifted towards caution, as underscored by Wu Yongming's emphasis on core competenciesThe company’s divestment from several non-core assets reflects a broader strategic retreat.

In 2024 alone, Alibaba divested from several companies across various sectors, dramatically offloading major assets from its new retail strategy, such as Intime RetailInitially investing over 25 billion yuan in Intime, Alibaba's recent sale of this asset at a substantial loss underscores the challenges faced by its longstanding vision of integrating online and offline retailThe initial hopes once pinned on Intime, to replicate its success in the digital arena, have not borne fruit.

As a result, Alibaba is gradually sidelining its new retail strategy within its extensive business portfolioThe new retail operations now fall within its N segment, alongside other fields such as Hema, Alibaba Health, and DingTalk, all of which collectively face limited profitability.

The staggering investment losses encountered over the years amount to hundreds of billions, indicated by unsuccessful applications that left the telecommunications giant scrambling to maintain its primary foundation—e-commerce