E-commerce giant Alibaba is planning to enter in Indian market this year. This plan created the buzz in e-commerce space in India. This planning is now in operational step. Alibaba Group’s global managing director K. Guru Gowrappan also met telecom minister Ravi Shankar Prasad.
Alibaba will serve customers, consumers and small businesses via its e-Commerce platform. Reports also suggest Alibaba’s interest in offline market as well.
“We are planning to enter the e-commerce business in India in 2016. We have been exploring very carefully the e-commerce opportunity in this country, which we think is very exciting on the backdrop of Digital India,” Alibaba Group president J. Michael Evans said in New Delhi.
“We have investments in both payments and e-commerce already and we will over the course of next year will figure about exactly what our strategy is,” Evans said.
We can expect Alibaba to focus on B2B market initially along with running B2C market. The B2B market in India has less competition as compared to B2C and Alibaba’s expertise in B2B market will surely help it to beat existing rivals in India.
Economics times also reported that Alibaba approached Tata Sons for the possible partnership for its Indian business. The company had the meeting with Tata Group’s Chairman Cyrus Mistry recently to discuss a partnership possibility. The company could have approached others too.
With the help of TATA, Alibaba will be able to get an immediate boost in terms of infrastructure capability and understanding of the consumer market.
FDI is still not allowed in Indian e-commerce section but foreign funding is not restricted in online marketplace. Amazon, Flipkart and Snapdeal used the same model in country. So, Alibaba’s direct entry into the offline business remains doubtful. But company is also looking for offline play in India. We are trying to get more info on its plans.
Now, if you look at the business, Alibaba sold goods worth $377 billion in 2015 while Indian e-commerce players sold around $16 billion in combined.
What about Alibaba’s existing India investment?
It is worth to note that Alibaba already invested in Indian e-Commerce market via Paytm and Snapdeal. It own 40% stakes on Paytm and own the considerable amount (5%) of shares in Snapdeal. Its existing players will run parallel to Alibaba’s standalone business in country. Alibaba has more than enough cash to push its Indian entry. It tested Indian market with its investments in Paytm and Snapdeal. Recently, it was also reportedly considering investment in Flipkart. I guess, it dropped plans because of this new bigger plan. We
We also heard rumours that Paytm is also thinking to open way for Alibaba by Spinning-Off its marketplace.
Alibaba to set up technology development centre in India
Alibaba seems very aggressive this time. In its initial move, it is also planning to set up a technology development centre in India. It will be done by the end of this year. Alibaba knows that India has engineers who have specialised in retail and e-commerce. It wants to leverage that potential.
Many companies in past did the same. Target and Amazon are most notable examples of this.
If we look at Indian e-commerce market, Amazon and Flipkart controls majority of the market. With sudden drop in Flipkart’s reputation and valuation, we see a scope for Alibaba. Alibaba’s entry is going to be big. It is using same move used by Amazon. but its expertise in B2B segment will surely help it to boost its growth in India.
