Four yeas ago, Alibaba made an entry into the Indian market with a B2B model, but has remained a negligible player here despite its huge presence in China. Valued at about $165 billion, Alibaba is now in talks with Snapdeal, the Delhi-based online marketplace, though nothing has been formalized yet. This news comes at a time when Alibaba is preparing to watch its shares make a debut on the American market in what seems like the world’s largest ever IPO offering.
Snapdeal, which has raised over $400 million since its inception, seems like the most popular choice for investors. Ratan Tata, Chairman Emeritus, Tata Sons, recently made a personal investment of an undisclosed amount in the company, as did Wipro Chairman Azim Premji, through his investment arm. Snapdeal is also drawing attention from Rakuten Inc, the largest e-commerce name in Japan, as well as from SoftBank Corp, a Japanese telecom firm.
On a couple of occasions, Snapdeal has casually expressed its interest in Alibaba. In an interview last month with Business Today, Kunal Bahl, the CEO of Snapdeal, had hinted at his inclination towards Alibaba by saying, “So we said we are going to do more of the Alibaba type of business where it’s a marketplace given that India like China has a fragmented supply side. We are going to get that on board. Have so much supply that if a consumer is looking for something, he will find it and we’ll have multiple sellers for the same product so that they compete among themselves in a healthy manner and the price for the consumer becomes more efficient.”
Jack Ma, the founder of Alibaba, has adopted an aggressive growth strategy, and the Chinese company has challenged Amazon, the Seattle-based online retailer that started operations in India last year, by launching a wholesale portal in the latter’s home market. Alibaba now has its eyes set on the growing Indian market, whose competition is growing too! With Flipkart and Amazon racing to the top, it would only intensify the competition with the entry of Alibaba. Snapdeal, which could be valued at about $4 billion in its next investment round, stands to gain from this move. Sellers would have to manage their pricing and listings even more strategically to make the most of this move. Consumers may have a reason to rejoice since this could mean better prices.
Alibaba is probably testing Indians waters before making an expansion here, as Ashish Jhalani, Chairman of the consultancy firm E-tailling India, points out some reasons for Alibaba’s interest in Snapdeal, ”Alibaba would need an Indian partner to quickly gain local scale and Snapdeal would be the best bet as Flipkart is focusing on further securing its leading position.”
Will Alibaba be able to crack the Indian market? Is Alibaba being cautious since there is a healthy dose of competition here, unlike the monopolized Chinese market? Is Alibaba to the developing world what Amazon is to the developed? Will Snapdeal strengthen its position because of this move and will this also invite further investment into Indian companies? We’ll know the answers to these soon, but for now we’re happy to see Indo-China trade flourish. Remember, “Hindi Chini bhai bhai”?
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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