Alibaba connects Taobao and 1688 to tap new users as fierce e-commerce competition ratchets higher

Alibaba Group Holding is integrating the services of its online wholesale marketplace 1688 with its flagship consumer shopping platform Taobao, as the e-commerce giant continues to consolidate assets amid internal restructuring and rising competition.

Taobao has recently featured three online stores under the 1688 name as it pushes to win over new users, according to people familiar with the matter who declined to be identified. The three stores, with a total of nearly 180,000 followers as of Tuesday, target different customer groups with various products.

One of them focuses on home furnishings and general merchandise, another mainly sells office supplies and business consumables, while the third sells industrial products, such as hardware tools and packaging consumables.

The stores are part of a larger plan by Taobao and Tmall Group, Alibaba’s main e-commerce unit, to connect the resources of 1688 to Taobao in order to tap new users amid rising competition.

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The access to Taobao allows 1688 merchants to directly face a wider range of users and test products in a larger market, the people familiar said.

Launched in 1999 when Alibaba was established, 1688 is one of the e-commerce giant’s earliest e-commerce platforms. The three stores being connected to Taobao target users with a variety of goods at ultra low prices.

Alibaba also owns the South China Morning Post.

The move is just the latest restructuring measure Alibaba has taken as it re-jigs its sprawling empire to unleash innovation. The group is also set to suspend operations at Ling Shou Tong (LST), a nine-year-old online platform that helps mom-and-pop shops source their products, by the end of this month.

1688 helps manufacturers and wholesale sellers directly connect to wholesale buyers in China.

The business-to-business platform provides sourcing and online transaction services to those who typically trade in apparel, accessories, packaging materials, office supplies, home decoration and furnishing materials, among other categories.

Last November, Eddie Wu, Alibaba chief executive officer and head of Taobao and Tmall Group, highlighted 1688 as being in the first wave of businesses set for “strategic-level innovation”, along with second-hand goods trading platform Xianyu, office collaboration and app development tool DingTalk, and search and cloud storage product Quark.

Wu, who took over as CEO of the e-commerce group in December, is aiming to sharpen the focus on consumer services and experiences as Alibaba faces off against rivals including PDD Holdings and short-video app operators such as Douyin.

Growth in Alibaba’s core businesses has slowed in recent quarters. The company reported lower-than-expected earnings in the December quarter, as Taobao and Tmall Group saw its revenue grow 2 per cent year-on-year, slower than 5 per cent for the whole Alibaba Group.