Chinese e-commerce major Alibaba Group is planning to enter India this year and is looking at opportunities to build the business organically or through other means.
If it does, Jack Ma’s Alibaba could compete head on with Jeff Bezos’ Amazon in India. The country’s top e-commerce player Flipkart, founded by Sachin Bansal and Binny Bansal (not related to each other), would also need to strategise to stay in the leadership position once Alibaba comes in as an active player and Amazon invests more. In October 2014, Amazon had announced a $2 billion investment in India and its executives said later that the group had an open cheque book for the market.
The announcement by Alibaba comes at a time when China’s economy, second largest in the world after the United States, is going through slowdown. Alibaba, which is keen on international expansion in that backdrop, would find Indian e-commerce an attractive market to enter for a big play at this point, analysts said.
Pegged at around $15 billion now, the e-commerce segment in India is projected to grow to $69 billion out of a total online pie of more than $100 billion by 2020, Goldman Sachs said recently.
“We are planning to enter the e-commerce business in India in 2016,” Alibaba group president J Michael Evans told reporters in Delhi on Friday after meeting Communications and IT minister Ravi Shankar Prasad. “We have been exploring very carefully the e-commerce opportunity in this country, which we think is very exciting against the backdrop of Digital India,” Evans said in a surprise move. Till now, Alibaba had focused on the business-to-business or wholesale space and had not indicated its interest in front-end e-commerce in India. The company could come alone as an online marketplace player or enter e-commerce as a partner with another company, it is learnt. It could look at organic growth as one of the options.
“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. Alibaba has made investments in Paytm and Snapdeal.
Speaking about the meeting, Prasad said: “We hope Alibaba will come and have a good footprint in India, including the expanding business of ecommerce (for which) they are exploring the possibility. I have said very clearly that Alibaba is quite free to come and expand its footprint in India.”
Meanwhile, Prasad also met Asia-Pacific head of Amazon Web Services (Public sector) Peter Moore, who discussed the company’s plans to launch a dedicated cloud region in India later this year.
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