When Chinese ecommerce global giant Alibaba recently increased its share in Paytm to 40%, after it had already invested a small sum in Snapdeal, everyone was wondering if the two online marketplaces would merge. Now a report by Businessworld suggests that the two could merge sooner rather than later in order to stay alive and compete adequately against the likes of Flipkart and Amazon.
The theory is that with Amazon possessing deep filled pockets and already investing $2 billion in the country with no let up, it could be a real contender to Flipkart’s crown. The report suggests that if Snapdeal and Paytm come together than they could increase operational efficiency and encourage more funding which is dearly needed, in a place where online discounts do not look like going out of fashion any time soon, despite concerted efforts. The article further suggests that Flipkart would also look for a buy out, by the likes of American retailer Walmart if the FDI laws evolve to permit such a scenario.
All the speculation surrounding the marketplaces could turn out to be well merited, although if you listen to the latest news from the Snapdeal and Paytm camps, it could turn out to be mere hogwash. Snapdeal co-founder and CEO Kunal Bahl believes Snapdeal will reach the number one position by March 2016, while Paytm did swift business during the recent Diwali sale, clocking up Rs. 300 crore worth of sales and it plans to reach Rs.1000 crore by December.
Elsewhere, Alibaba recently shattered the global online shopping record during Singles Day. As it seems to have a finger in every pie it could be ready to further back up its partners if its long term strategy supports it. Amazon who recently received funds from Tiger Global, has missed out on key markets to Alibaba globally and will be adamant not to miss a trick in India, so we can expect the plot to thicken further.