(Yicai) Sept. 9 -- Alibaba Group Holding plans to consolidate management of 1688 and Alibaba.com, the e-commerce and artificial intelligence giant’s domestic and international wholesale businesses, with the aim of leveraging AI and China's supply chain strengths to link the two markets.

Alibaba.com’s General Manager Zhang Kuo will lead the new Global Wholesale division, Yicai learned from Hangzhou-based Alibaba yesterday. Yu Yong, who heads 1688, will be reassigned.

Alibaba’s latest quarterly results reorganized its e-commerce group into four divisions -- China E-Commerce, China Quick Commerce, International E-Commerce, and Global Wholesale -- with the aim of unlocking synergies across the domestic and international e-commerce businesses.

In the three months ended June 30, China E-Commerce’s revenue fell 8 percent from a year earlier, while Global Wholesale’s income rose 7 percent, emerging as a key growth driver.

The strategic value of combining 1688 and Alibaba.com lies in removing the traditional separation of domestic and export-oriented trade, thereby allowing manufacturers to manage a single inventory and product catalog that simultaneously serves Chinese wholesalers and overseas buyers, said Zhang Yi, chief executive officer and chief analyst at iiMedia Research.

The move is driven in part by competition. PDD Holdings-owned Pinduoduo plans to invest CNY100 billion (USD14.9 billion) over the next three years to integrate its supply chain resources with Temu, PDD’s international marketplace, while Shein aims to connect long-tail demand with supply.

Alibaba is also responding to changes across the business-to-business sector. Export customer-acquisition costs continue to rise, many manufacturers want to expand internationally but lack dedicated overseas teams, and AI-powered procurement tools and autonomous agents are making buyers increasingly willing to engage directly with factories rather than intermediaries.

AI will dramatically reshape B2B platforms and could even alter their underlying business models, according to Jiang Fan, CEO of Alibaba E-Commerce Business Group. Accio Work, a plug-in AI agent Alibaba.com launched in March to help smaller businesses automate daily operations, is already being used by more than 50,000 paying merchants, he pointed out.

AI is changing consumers’ buying habits and enabling merchants to make better merchandising decisions. A key challenge for Alibaba following this reorganization is how to further drive innovative AI applications in B2B operations and enhance coordination between demand and supply chains.

The trend of cross-border competition extending into the supply chain is irreversible, Zhang Yi noted. However, connecting domestic and international supply chains and markets may bring risks, such as uneven product quality and more quality control and compliance issues, which will further test platforms’ governance capabilities and raise governance costs, he added.

Editor: Futura Costaglione