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Alibaba Group Holding is seeing solid early results from its push into “instant commerce”, a shopping model the Chinese technology giant hopes will drive sales growth amid sluggish consumer spending and intensifying e-commerce competition. According to the latest company data, Taobao Shangou – Alibaba’s “instant buy and instant delivery” service – generated more than 100 million non-food orders from new users during the first two weeks of the Singles’ Day shopping festival as of Wednesday. The results suggest Alibaba’s strategy of attracting new consumers through heavy subsidies on everyday items such as milk tea and lunchboxes is paying off, justifying the Hangzhou-based company’s large investment in the model and strengthening its position against rivals including Meituan, PDD Holdings and JD.com. Launched in late April, Taobao Shangou was now “a major driver of brand growth and significantly boosted e-commerce sales”, Alibaba’s Taobao and Tmall unit said in a statement on Thursday. Alibaba owns the South China Morning Post. The rise of instant commerce – where orders are delivered within 30 minutes or less – depends on highly efficient warehousing and logistics. Alibaba had applied its artificial intelligence systems to optimise delivery routes and ensure smooth fulfilment, the company said. As consumers grew accustomed to instant deliveries for drinks and meals, they were increasingly ordering other products, from shampoos to smartphones, analysts noted. Huawei Technologies, for instance, joined Taobao Shangou with its 3,000 stores and gained nearly 200,000 new customers in a week, Alibaba said. About 20,000 food brands and nearly 900 non-food brands saw their sales on the platform rise by more than 100 per cent year on year, it added. The 100 million non-food orders recorded during the Singles’ Day festival could help ease concerns that Alibaba’s subsidies for instant commerce might fail to generate sustainable demand – a major question hanging over the profitability of the new model. Taobao Shangou, backed by a 50 billion yuan (US$6.9 billion) subsidy pledge announced in July, reached a record 120 million daily orders and 300 million monthly active users in August, according to Jiang Fan, head of Alibaba’s E-commerce Business Group. Jiang said during an August earnings call that instant retail could add as much as 1 trillion yuan in additional transactions to Taobao over the next three years. In a separate move, Alibaba this week rebranded its food-delivery platform Ele.me as Taobao Shangou, as part of a broader effort to create stronger synergies across its consumer businesses.
