After making several big-ticket investments in Indian startups, Alibaba is all set to set up its own e-commerce operations in one of the world’s fastest growing e-commerce markets. Sources familiar with the matter told the Economic Times that Alibaba group president Michael Evans recently held meetings with Tata Group chairman Cyrus Mistry to explore a partnership.
Paytm, Snapdeal can wait
Tata is a $150 billion conglomerate that makes everything from salt to Jaguar and Land Rover vehicles. The publication added that the Jack Ma-led company was also talking to other companies, but Tata Group would make an ideal partner. Evans and Mistry’ discussions also covered logistics, omni-channel support, and offline stores.
Previously, there were speculations that the Hangzhou-based company would enter the Indian market through its investments rather than making a direct entry. Last year, Alibaba and its financial services affiliate Ant Financial invested $680 million in mobile payments service Paytm to acquire 40% stake. The Chinese company had also picked a roughly 5% stake in Snapdeal in a deal that valued the Indian startup at $5 billion.
Analysts were of the opinion that Alibaba could step up its investments in these two companies and combine them to challenge Flipkart and Amazon. Unlike China, the Indian e-commerce market is fiercely competitive with several players trying to grab a piece of the pie. Flipkart remains the largest player with about 45% market share. Morgan Stanley analysts believe that the Indian e-commerce market size would grow from $20 billion to $159 billion by 2020.
Alibaba to have an Indian platform by the year-end
Evans announced Friday that Alibaba would enter the Indian market by the end of this year. A partnership with Tata Group could give the company a major boost in terms of infrastructure, retail presence and understanding of the consumer market. Tata has been India’s most trusted brand for more than a century.
Amazon has already committed to invest more than $2 billion in India, saying it has an “open check book” for the market. While Alibaba may be a late entrant, there is still scope. The online shopper penetration in India stood at 12% in 2015, which is expected to rise to 20% by 2017.