Alibaba’s community group-buy arm Taocaicai suspended operations in southwestern China’s Guizhou province on Tuesday. Chinese media attributed the suspension to its accessibility issues within the WeChat ecosystem.
Why it matters: Despite Chinese regulators ordering tech giants to tear down walls between the services, blocking moves to fend off competition still persist.
- The road to success in China’s community group-buy market, even for e-commerce giants the size of Alibaba, remains bumpy. Since mid-2021, market consolidation has wiped out some of the top rivals in the industry.
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Details: Taocaicai said in a Tuesday statement that it will stop operations in Guizhou. The firm stated that it will update the digital system for the region to “avoid the service barriers incurred by connectivity issues,” insinuating its lack of access to Tencent’s superapp WeChat is to blame. The company didn’t mention a timeline for resuming services in the region.
- Although the statement refers to the reason for the suspension in vague terms, an employee of Taocaicai told Chinese media Tech Planet (in Chinese) that the move is largely the result of the application experiencing delayed software updates on WeChat’s mini-program system (an app-store-like ecosystem within the app). The delay leads to inferior user experiences, the source added.
- Taocaicai failed to get its WeChat mini-program updates approved for more than seven months despite continuous efforts to communicate with the platform, says Antonio Liu Neng, who identified himself as a programmer at Taocaicai in a post published on professional networking platform Maimai. By comparison, Tencent-related community group-buy platforms such as Meituan Select and Duoduo Maicai update weekly.
- WeChat mini-programs are a vital channel for community group-buy services to reach customers, especially in lower-tier cities where people rely on WeChat more for daily tasks and transactions.
- Delayed updates to WeChat mini-programs harm Taocaicai’s ability to attract and retain users with sophisticated social functions such as lucky draws and coupons, said the Tech Planet report.
- However, the suspension won’t affect much of Alibaba’s community group-buy business, since Guizhou represents only a small portion of the company’s activity, said the report. The platform recorded more than 13 million daily orders in November, trailing only Meituan Select and Pinduoduo’s Duoduo Maicai in volume, thanks to growth in provinces such as Guangdong, Jiangsu, Hubei, Anhui, Shandong, and Henan.
Context: Alibaba, which has placed big bets on community group-buy services, is aiming to take over the market share left after rivals like Tongcheng Life and Shixianghui exited in recent months.
- In September, Alibaba rebranded its community group-buy services to Taocaicai by incorporating two existing community grocery services, Freshippo Market and Taobao Maicai.
- Authorities have made it clear that companies must stop blocking links to rivals’ services on their apps.
- Alibaba and Tencent have begun to heed Beijing’s orders over the past few months by partially opening their services to each other.