Alibaba was planning to directly enter into the Indian ecommerce market in 2016. That didn’t happen. But the Chinese ecommerce giant is now gearing up for its India innings.
According to news reports, Alibaba is looking to invest a sum between Rs 1,350 crore and Rs 1,700 crore in Indian etailer Paytm. The China-based firm already has stake in Paytm. But this new investment would increase its stake to nearly 50%, making it a majority stake holder.
Entering India’s ecommerce industry via Paytm
Many are regarding this latest round of investment as Alibaba’s official entry into Indian ecommerce. Vijay Shekhar Sharma-led Paytm has been helping the international ecommerce biggie to spread its presence in India. The buzz about Alibaba grabbing a major stake started in August 2016.
“The Alipay-Alibaba combine will now own over 50 per cent in the unit. The online marketplace business will either be called PayTM Mall or PayTM Bazaar,” a source confirmed.
The groundwork has already begun. A host of logistic companies are more than willing to partner with Alibaba. A team for India operations and third-party online payment solution are already in place. First office is also being set-up in Mumbai. Sellers from China and Chinese made products too have gained entry via Paytm and Alibaba.
Will Paytm be the new rival of Amazon after Flipkart?
While Flipkart is preparing for a down round of funding after reducing its valuation, Paytm’s valuation is set to touch to $1 Billion. Alibaba’s payments affiliate Alipay and investment firm SAIF Partners have zeroed down on this value for Paytm’s online marketplace platform.
Flipkart’s weakening market position presented a great opportunity to American etailer Amazon to acquire a large slice of the Indian ecommerce pie. But with Alibaba’s entry, Amazon would come face-to-face with another strong international online player.
“It is a great news for the industry as there is a large player to take on Amazon, and this could potentially lead to acquisition of players. Alibaba will look to acquire and add speed while Amazon will acquire to stop their momentum,” said an undisclosed online retailer.
What would happen to Amazon, Flipkart and Snapdeal? Would Alibaba-Paytm become the new Indian ecommerce leader?