Amazon-Jabong or Alibaba-Snapdeal: Which deal will be first?

If buzz on the block is to be believed, we are in for news soon about one of these or maybe even both: Amazon acquires Jabong or Alibaba invests in Snapdeal. Either way, this would mean major structure change in the Indian ecommerce space and reason for the rest to start rethinking their strategies.

Amazon and Jabong

Earlier in October, we heard about possible talks between Amazon and Jabong. While we still don’t know if it’s Amazon’s way of taking Flipkart head-on after the Flipkart-Myntra merger, the news about a possible merger seems more concrete now.

In what could turn out to be the biggest acquisition in the history of Indian ecommerce, Amazon and Jabong have concluded the first round of talks to settle on a deal worth USD 1.1-1.2 billion. However, it is still hazy as to how the deal would really work. Jabong being an inventory-led etailer does not have foreign investment backing.

“The way the market is placed, fashion is the biggest category. However, it would not be possible for a general merchandiser to crack this industry without targeting inorganic growth,” one of the sources shared, who did not want to be named.

Of late, Amazon has been subjected to regulatory issues and it would be no surprise if it were subjected to further scrutiny should the deal move forward. There is also speculation that Jabong would be kept as a separate entity.

How the deal would pan out in the ecommerce-scape of India should be interesting, as Jabong could find it difficult given that this is Amazon’s strategy play and how high the stakes are for Amazon.

Alibaba and Snapdeal

Anything to do with Alibaba is interesting and must-read. Jack Ma, founder of Alibaba, is in India with his army of men to meet several entrepreneurs one of which is Snapdeal’s Kunal Bahl. Bahl has openly revealed his admiration for the ecommerce giant, including the fact that his company’s business model is based on Alibaba’s.

Earlier, Kunal Bahl had told CNBC 18, “If Alibaba in China, which is the business we are most similar to, generates $5 billion EBITDA a year, there is a reason for it. They are not a retailer, they are a technology platform and that gives me confidence that in due course… we will see similar economics emerging out of our company as well.”

Alibaba is on a major expansion spree in Asia, including India and Snapdeal probably looks the most promising to them. Ratan Tata also invested personally in Snapdeal recently, adding to its credibility.

So which deal first?

Although there is no indication of which will be first, it will be interesting to see how finalization of these could lead to strategy and structure changes in the other ecommerce players.