Research on Digital Transformation Path and Development of the

e-Commerce Industry: Taking Alibaba as an Example

Huaen Lu

Aberdeen Institute of Data Science and Artifical lntelligence, South China Normal University, Foshan, China

Keywords: e-Commerce, Digital Transformation, Alibaba.

Abstract: With the development of digital technology, the e-commerce industry has good opportunities for digital

transformation. This paper takes Alibaba as the research object, uses PEST and Porter's Five Forces model to

analyze the transformation motivation of its digital transformation, studies the implementation path and

effectiveness of its digital transformation, and based on the analysis, puts forward the four trend of China's e-

commerce industry's future development, and proposes three relevant development suggestions to e-

commerce enterprises.

1 INTRODUCTION

1.1 Research Background

In an era of rapid technological progress, the digital

economy is developing more and more rapidly, and is

gradually transforming itself into a key force in

reorganizing global factor resources and changing the

pattern of international competition. In recent years,

the government has issued a number of policies

related to the "digital economy", such as the "Overall

Layout Plan for the Construction of Digital China",

the "14th Five-Year Plan for the Development of the

Digital Economy", etc. These policies have

repeatedly mentioned the importance of the

development of a digital economy and encouraged

enterprises to accelerate digital transformation and

develop digital industries. The trend of digital

economy scale and e-commerce transaction scale

show convergence (Zhang et al., 2024). As one of the

most dynamic economic activities in China at present,

the e-commerce industry is a new focus to stimulate

consumption potential. Driven by the digital economy

era as well as policies, the e-commerce industry is

also facing new challenges and opportunities.

1.2 Research Significance

Under the influence of digitization, consumers are

more and more inclined to socialize and shop online,

a trend that brings growth potential to the e-

commerce sector. However, the 2023 Accenture

Digital Transformation of Chinese Enterprises

research shows that only 2% of Chinese enterprises

are undergoing comprehensive and sustained digital

transformation, implying that Chinese enterprises

have yet to establish an advantage in the area of

building a digital core. By taking Alibaba as an

example, this paper studies the digital transformation

path of the e-commerce industry, which can provide

practical cases for the transformation of the e-

commerce field and help more e-commerce

enterprises find new growth points in the fierce

market competition.

2 LITERATURE REVIEW

2.1 Definitional of Enterprise Digital

Transformation

Numerous scholars have been publishing different

interpretations of the connotation of enterprise digital

transformation. Before, it was considered the

strategic positioning that supports the strategic

transformation of an enterprise brought about by the

application of digital technology as well as the

development of the enterprise's operations during or

after the transformation, and it is a blueprint for

guiding and supporting the digital transformation

(Matt et al., 2015). Nowadays, the process of

enterprise digital transformation is regarded as a

208

Lu, H.

Research on Digital Transformation Path and Development of the e-Commerce Industry: Taking Alibaba as an Example.

DOI: 10.5220/0012923100004508

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st International Conference on Engineering Management, Information Technology and Intelligence (EMITI 2024), pages 208-214

ISBN: 978-989-758-713-9

transformation enabled by information technology

change (Li et al., 2018). The essence of enterprise

digital transformation is to use digital means to drive

change within the organization (Ilvonen et al., 2018).

2.2 Drivers of Enterprise Digital

Transformation

The main factors that drive the digital transformation

of an organization are divided into external and

internal factors. In terms of external factors, digital

transformation is driven by digital technologies and

requires the simultaneous assistance of multiple

technologies (Chanias et al., 2019). In addition, a

series of digital economy policies introduced by the

state have likewise driven the digital transformation

of enterprises (Liu et al., 2024). In terms of internal

factors, the firm's own characteristics, such as the

supportive attitude of corporate executives towards

digital transformation, are prerequisites for firms to

undergo digital transformation (Sun et al., 2020).

Interdependence between the executive team and

functional heads is essential to promote a high level

of digital orientation (De Lomana et al., 2019).

2.3 Digital Transformation in the

e-Commerce Industry

Currently, several e-commerce companies are already

undergoing digital transformation and benefiting

from it. For example, Alibaba has realized an online-

offline integration model through its Taobao and

Tmall platforms. Amazon has used its superior data

analytics to recommend customized products to users,

enabling precision marketing and increasing sales

conversion rates. However, due to the uncertainty of

the market environment, especially small and

medium-sized enterprises still have not attempted

digital transformation. With the rapid progress of big

data and artificial intelligence, the future of the e-

commerce industry should build a digital industrial

ecosystem across the entire industrial chain, so that

more SMEs and consumers can take advantage of the

new e-commerce model to achieve rapid

development (Gu, 2023).

2.4 Literature Evaluation

The definition of enterprise digital transformation can

be summarized as the comprehensive change and

upgrading activities within the organization based on

digital intelligence empowerment and technological

upgrading, with the enterprise as the main body. In

addition, the author found that most of the current

literature is only a shallow example of an enterprise's

digital transformation practices and their results and

did not explore in depth the various stages of digital

transformation and the business model of the

enterprise adjusted according to the dynamic

environment, which is of little reference value for

SMEs to carry out digital transformation. Therefore,

this paper takes Alibaba as an example, discusses the

drivers of digital transformation and challenges faced

by the e-commerce industry, and provides useful

suggestions for the future development of Alibaba

and the e-commerce industry.

3 ANALYSIS

3.1 Digital Transformation

Development Phase

3.1.1 In 1999-2009

In the 10 years since its founding, Alibaba has

launched Taobao, Alimama, and Tmall. In 2009, they

began exploring digital transformation and created

Aliyun, the cloud computing business, which is the

backbone of Alibaba Group's digital technology and

intelligence business, providing a full range of cloud

services to global customers.

3.1.2 In 2010-2015

From 2010 to 2012, Alibaba's e-commerce business

entered an explosive period with the launch of

"Express" and mobile Taobao client, and the

emergence of several business teams, such as 1688

and AliExpresses, etc. From 2013 to 2015, Alibaba

captured the opportunity of "Internet+" and put

forward the new retail model and innovative O2O

operation model. In order to solve the problem of

rapid growth of data scale, all business department

data are synchronized to a unified big data platform

for management, which improves the efficiency of

data processing.

3.1.3 In 2016-2020

Alibaba announced the launch of its "Middle

Platform Strategy", more businesses are beginning to

move towards real-time.

During this period, Alibaba practiced new retail

business with different brands and merchants, as well

as upgraded its technology and expanded

internationally. 2019 saw the successful listing on the

Research on Digital Transformation Path and Development of the e-Commerce Industry: Taking Alibaba as an Example

209

Hong Kong Stock Exchange, which provided an

opportunity to expand the Company's capital base.

Under the environment of the new crown epidemic

outbreak in 2020, Alibaba has made steady progress,

and its e-commerce platform Lazada has efficiently

integrated its logistics capability and e-commerce

business with a new logistics system through the

Apollo Program.

3.1.4 2021 to Present

Since 2021, Alibaba has launched or upgraded a

series of service measures around globalization,

consumer market, innovation and technology, etc., to

further promote enterprise data transformation. In

terms of technology, Alibaba launched the

ModelScope open-source model to promote business

innovation, and the latest language model

"Tongyiqianwne" to support the digital

transformation of enterprises. In addition, Taobao and

Tmall successively launched some analytics and

marketing tools and other merchant support

initiatives to help merchants improve operational

efficiency. They also introduced a number of new e-

commerce AI tools and services to bring consumers a

brand new experience.

3.2 Driving Factors of

Macro-Environment

3.2.1 Political

Over the years, the government has issued a number

of policies to encourage enterprises to actively

develop the digital industry. In addition, the national

e-commerce demonstration city pilot policy is also a

major move to promote the digital transformation of

e-commerce. The policy was first implemented in

2009. Research shows that the pilot policy has

promoted the development of logistics distribution

system, electronic payment and key areas of

information interconnection, and effectively

improved the level of digital transformation of e-

commerce enterprises (Liu et al., 2024).

3.2.2 Economical

Research shows that the development of digital

economy can effectively promote the level of high-

quality development of regional e-commerce (Zhang

et al., 2024). The scale of China's digital economy

reaches 50.2 trillion yuan in 2022, showing leapfrog

development compared with previous years, which

has a good development prospect for the digital

transformation of the e-commerce industry.

However, since 2018, the ratio of per capita

consumption expenditure to per capita disposable

income has generally shown a downward trend, and

the domestic consumer market is facing the pressure

of tightening, which brings certain challenges for e-

commerce platforms.

3.2.3 Sociocultural

Affected by the overall domestic consumption

environment, China's e-commerce market user traffic

dividend has been decreasing, and the overall growth

rate of the industry has slowed down. However, in

2023, China's sinking markets account for more than

60% of China's total population. The e-commerce

infrastructure and other elements of e-commerce

development in these regions are accelerating

reconstruction, bringing new opportunities for e-

commerce platforms. Meanwhile, the development of

cross-border e-commerce has entered a three-

dimensional development stage in recent years,

driving the digital transformation of e-commerce

enterprises, thus enhancing the convenience of cross-

border export business and promoting the healthy and

orderly development of the industry.

3.2.4 Technological

Diverse modern technologies achieve more in-depth

development and optimization today. Organizations

can utilize big data technologies to store massive

amounts of data, help segment customers (Mathew et

al., 2021), and unlock business value. Cloud

computing technology can likewise offer many

advantages to large leading companies (Davydov et

al., 2020). In the present time, it possesses more

dynamic characteristics and can show great capability

when dealing with rich data resources. Aliyun, the

world's leading cloud computing service provider,

has introduced several technologies that facilitate

industries to stay ahead in the digital transformation.

3.3 Driving Factors of

Micro-Environment

3.3.1 Competitive Rivalry

The threat of competitors in the e-commerce industry

is higher. China's e-commerce industry is mainly

categorized into traditional e-commerce platforms

and emerging e-commerce platforms, and in recent

years, emerging forces in the e-commerce industry

have continued to join the market competition. Data

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shows that the total amount of fast e-commerce

transactions in 2022 increased by 32.5% year-on-

year, demonstrating a strong growth momentum. At

the same time, traditional e-commerce is constantly

seeking breakthroughs. PDD adopts a new e-

commerce model of "social + shopping" mode, which

enables it to obtain a large number of active online

shopping users in a short period of time at a low cost.

Although Alibaba's deposit in the e-commerce supply

chain is larger than that of PDD, the competitive

pressure has increased dramatically in the face of

PDD's "low-priced strategy".

3.3.2 Power of Buyers

The bargaining power of consumers is high. As the

domestic demand conflicts continue to highlight,

consumers have a higher demand for low-priced

goods. At the same time, consumer psychology has

become more rational. Among the factors attracting

consumers to e-commerce platforms, the importance

of price concessions and ease of return and exchange

has increased significantly in 2023. PDD and JD have

clear and wide range of major target markets, and the

diversity of goods also meets the needs of most

consumers, the cost of consumers switching products

is small.

3.3.3 Power of Suppliers

The bargaining power of suppliers was low, due to the

impact of competition from low price strategies. In

addition, in recent years, Alibaba has invested in a

number of suppliers to promote new product

innovation and technological upgrading of suppliers

and formed a good cooperative relationship with

suppliers. For example, Mengniu's "Tianxianpei".

Under the long-term and in-depth cooperative

relationship, the bargaining power of suppliers is

lower.

3.3.4 Power of Substitutes

The power of substitutes is moderate. Offline retail

and digital retail are alternation to the e-commerce

industry. Although offline retailing has gradually

withdrawn from the competitive market, digital

retailing has a strong hidden shopping potential as it

operates on the WeChat platform, which simplifies

the circulation of goods and saves resource costs and

circulation expenses for enterprises. Although

Alibaba has a more complete industrial chain, the

price advantage will still pose a threat to Alibaba.

3.3.5 Threat of New Entrants

The threat of new entrants is moderate. In China, due

to the rise of short videos as well as live e-commerce,

more startups have tried to enter the market in recent

years. However, with Alibaba's many years of

experience in the business, it has significant brand

effect and large user base, as well as emerging e-

commerce platforms “Douyin” and “Xiaohongshu”

also occupying some of the market's resources and

traffic heat, it is not easy for new entrants to enter the

market and earn a certain amount of exposure in a

short period of time. To summarize, although the

threshold of entry for startups is low, it is more

difficult to obtain resources as well as traffic, so the

threat of potential entrants in the e-commerce

industry is moderate.

3.4 The Effect of Digital

Transformation

Alibaba has developed into a comprehensive e-

commerce ecosystem covering a wide range of areas

including B2B, new retail and other areas through

continuous business model optimization. According

to Alibaba's full-year results reports for the fiscal

years since 2015, the GMV (as shown in Table 1) and

the annual active user base (as shown in Table 2) of

the retail platform in China are generally on an

upward trend. In particular, during the period from

FY2016 to FY2019, the Group utilized advanced

technologies such as big data to enhance platform

personalization, and Taobao's functions based on big

data technology boosted user engagement, increased

conversion rates and drove active users. Tmall is

equipped with comprehensive analytics tools for

merchants, attracting many brands to the platform.

So far in FY2020, the Group's e-commerce

platform has been actively exploring new businesses,

leveraging short videos and other forms to meet the

digital needs of consumers, with strong growth in

revenues from the retail commerce business and

cloud computing. The Group is focusing on

expanding its digital supply chain, multi-format new

retail business and cross-border e-commerce. In

FY2022, more than 124 million AACs will spend

more than RMB10,000 per capita on Taobao and

Tmall, while the Group's APP matrix is starting to

take off, and platforms such as Taote and Taocaicai

will bring more consumers to the Group's e-

commerce system.

Research on Digital Transformation Path and Development of the e-Commerce Industry: Taking Alibaba as an Example

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Table 1: Alibaba China Commerce Retail Platforms’s

Annual GMV.

Table 2: Alibaba China Commerce Retail Platforms Active

Customers.

Alibaba's e-commerce business digital

transformation initiatives over the years have brought

extraordinary revenues to the group (as shown in

Table 3), but the turbulent market environment

continues to bring negative impacts to Alibaba. In

recent years, Alibaba has made frequent adjustments

to its internal organizational structure to cope with the

vagaries of the market, but plans have failed to catch

up with changes, and Alibaba's market share in e-

commerce has continued to decline. Alibaba's

revenues from its China retail business segment

declined by 2% in FY2023. In the future, it will be

important to deepen and accelerate the digital

transformation of enterprises in line with consumer

trends and the direction of the industry.

Table 3: Alibaba Annual Revenue.

4 DISCUSSION

4.1 Future Development Trend

4.1.1 Diversified Model Sets off the Heat

The e-commerce industry is an ever-changing market.

Based on past accumulation and the recent rise of

various types of social media and short videos, the e-

commerce industry has already given rise to a variety

of segments, such as shelf e-commerce, short video +

live broadcasting, community group purchasing, etc.

Each segment of the market is different at different

times and places to set off a different trend, showing

different competitiveness, it can be said that, in the

ever-changing market environment as well as the

basis of the existing segmentation mode, there are

more unnoticed multi-modal, diversified modes to be

explored.

4.1.2 Sinking Markets Become the next

Growth Market

Currently, the population of China's sinking market

accounts for more than 60% of China's overall

population, and with the development of the Internet

and the widespread use of mobile payments, the use

of online shopping services in the countryside is

gradually becoming more common. In addition,

compared with urban residents, rural residents have

relatively less pressure to purchase houses and live in

consumption, indicating that rural residents have

huge consumption potential, which may become a

new impetus for the development of e-commerce.

This shows that the sinking market will definitely

bring new opportunities for the e-commerce industry.

4.1.3 Breaking down the Low Price

Strategy

Consumer preferences have tended to be low-priced

in recent years. In 2023, the major platforms are

2 444

3 092

3 767

4 820

5 727

6 589

7 494

7 976

2015 2016 2017 2018 2019 2020 2021 2022

(RMB bn)

China Commerce Retail's GMV

350

423

454

552

654

726

811

903

2015 2016 2017 2018 2019 2020 2021 2022

Million

Active customers

200

400

600

800

1000

(RMB bn)

Annual

Revenue

Core

Commerce

Revenue

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committed to attracting users and seizing market

share through various subsidies and other forms.

However, the low price strategy is always not a long-

term initiative to maintain the competitiveness of the

enterprise market, but only a way to obtain the market

in the short term. In the future, major platforms will

be committed to increasing reform efforts in the

industry chain as well as platform rules to solve the

problems brought by the low price strategy.

4.1.4 Exploiting Offshore Markets

The Ministry of Commerce of China has proposed to

expand "Silk Road E-commerce" cooperation and

accelerate the construction of "Silk Road E-

commerce" cooperation pilot zones. This is an

opportunity for e-commerce enterprises to develop

overseas markets, following the country's strategic

pace of expanding the international market, more

effectively grasp the country to promote the new

trend of international development, and therefore

have more potential to utilize cross-border trade to

achieve the development of this path to leap.

4.2 Recommendations

4.2.1 Develop Diversified Modes

When developing its e-commerce business, Alibaba

has not only developed its core e-commerce platforms

Taobao and Tmall, but has also launched platforms

such as Taote and Taocaicai. Synergistic eco-

businesses effectively driving user retention and

high-quality growth. E-commerce consumption field

is extremely decentralized today, how business

integration of multiple modes to enhance user

stickiness and conversion rate, aiming at a more

segmented market to seize the market opportunity, is

the current enterprise needs to think about the place.

Enterprises in this wave of digital technology,

enterprises should seize the opportunity to utilize

digital technology, break the single operation mode,

and actively layout multi-modal business model.

Through technological innovation, model innovation

and business innovation, the core competitiveness of

enterprises is constantly improved.

4.2.2 Enhance Platform Personalized

Services

E-commerce applications have gradually adopted a

user-centered product and service operation model. In

the future, the sinking market is a new direction for

the e-commerce industry to develop, which has a

decentralized and large scale, and it is essential to

label users and apply technologies to analyze

consumer behavior to develop different marketing

strategies. In addition, e-commerce companies need

to integrate local resources, visualize the logistics and

warehousing chain, and maximize the convenience of

consumption in the sinking market. As can be seen by

the example of Alibaba, personalized services

effectively promote GMV as well as annual active

users. Under the macro environment of the

continuous development of big data technology, the

e-commerce industry will be more convenient and

comfortable in the processing and analysis of data.

4.2.3 Make Good Use of AI

Generative AI is being widely used as an e-commerce

assistant. During the Double Eleven Shopping

Festival in 2023, Taobao launched a shopping

assistant called "Taobao Wenwen", which improved

the platform's e-commerce conversion rate during the

Double Eleven Shopping Festival. At the same time,

“Alimama” launched the "AI live room" function to

effectively reduce the cost of live broadcasting by

90%. It can be seen that artificial intelligence has

become a key technology for major e-commerce

platforms to improve user experience and ensure the

prosperity of the ecosystem. In the future diversified

modal, cross-channel e-commerce environment, the

best experience will take place on new AI-based

technologies, and enterprises should study and

optimize the internal structure of commodity

information in greater depth, increase investment in

science and technology research and development,

and promote a closer integration of AI technology and

business processes.

5 CONCLUSIONS

This paper argues that Alibaba's digital

transformation is promoted by national policy, digital

technology, competition in the e-commerce industry

and many other factors. Its use of digital technology

to achieve product and service personalization and

other initiatives to effectively improve performance.

Based on the analysis of the market environment and

Alibaba's development path, the author believes that

the current development trend of the e-commerce

industry is the popularity of platform model

diversification, the sinking market has become the

next step in the development of the market, the low-

priced strategy has been broken and cross-border e-

commerce heat is rising. E-commerce enterprises

should use digital technology to develop diversified

Research on Digital Transformation Path and Development of the e-Commerce Industry: Taking Alibaba as an Example

213

models, personalized services, and most importantly,

make good use of artificial intelligence to achieve

cost reduction and efficiency, and help enterprises

develop sustainably.

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