Can Alibaba in Indian Ecommerce Invigorate the Online Retail Market?
The Indian online retail market has been dominated by the top three players – Flipkart, Amazon and Snapdeal, for the past few years. With the sale season upon us, it is hard to miss the aggressive marketing tactics each of them are utilizing to one up each other. At the same time, there seem to be a few massive impending changes looming in front of the Indian online retail market, especially after the 100 % FDI on enterprises operating on an online marketplace model, that the government announced earlier this year. A major player that has been eyeing the Indian online market for a long time is Alibaba.com. Alibaba in Indian ecommerce market anytime soon, would cause a huge shift in market dynamics.
Alibaba might not be a popular name for the Indian consumer, but it is surely known to wholesalers around the world. Alibaba’s net worth and market share across the world would put Amazon to shame. It is China’s largest online retailer, controlling over 80% of its market share. Let us not mince words – Alibaba is the largest e-commerce company in the world. And the etailer is looking to enter the Indian ecommerce market.
But with Alibaba in Indian ecommerce what can online sellers expect? One thing is for sure – with the increased competition at the highest level of online retail, and the increased choice for the online retailer, it would surely be an interesting scenario. Let’s take a look at some things that make Alibaba a viable choice for the Indian retailer as opposed to the existing players.
What makes Alibaba in Indian ecommerce so different from other marketplaces in the country?
1. Reach and Popularity
Alibaba.com already has a massive reach and popularity around the world, extending up to around 190 countries. As of April 2016, it was named the world’s largest retailer. To give an instance of this, the Singles’ Day Sale in China on 11th November 2015 (Similar to the Big Billion Day) hosted by Alibaba saw net sales worth $14.32 billion. This is at a time when Flipkart was targeting net sales of $500 million during its 5 day sale. Alibaba also has an extremely wide network of wholesalers all over the world, even in places like India where it does not engage in online retail.
2. Scale of Operations
It is evident from the past couple of years that Flipkart, Amazon and Snapdeal are locked in a battle of endurance. All three companies are bearing heavy losses by pumping capital into marketing and competitive pricing strategies. While Flipkart and Snapdeal rely on various investment firms for their inflow of capital, Amazon India is backed by Amazon. Considering the fact that Alibaba is the highest ranking ecommerce company in terms of net worth, it can easily match up to its opponents. Alibaba was valued at $212 billion in December 2015.
3. Range of Operations
The important thing to understand about Alibaba is that it is not a company, but a group. This includes Taobao.com – the online auction site, Tmall.com – the online retail platform for authorized sellers, Alibaba.com – the B-2-B online sales platform, AliPay, the 3rd party online payment platform, eTao – the shopping search engine, and many more. The Alibaba Group is therefore invested in various aspects of ecommerce. By working in tandem with each other, these smaller companies contribute to the Alibaba Group.
4. E-Commerce Experience
Arguably, there is no other company with more experience in ecommerce – both in terms of the range of services provided and the depth in which the operations take place – than the Alibaba Group. It would be interesting to see how it manages to set up a logistical network within India. Alibaba’s entry into the Indian market could also be a game changer in terms of the mobile commerce and the use of smartphones in online retail. In February 2015, Alibaba planted its flag in Indian online retail soil by signing a deal to buy 25% stakes in One97, the owner of the ecommerce platform Paytm. At the time, Cyril Han, the CEO of Ant Financial Service Group, an Alibaba affiliate that facilitated this sale, said that,
At the time, Cyril Han, the CEO of Ant Financial Service Group, an Alibaba affiliate that facilitated this sale, said that, “India is a very important market for us because the population of 1 billion is just as large as China, while we also see the smartphone growth in India as more users will use mobile phones for payments and shopping,” Considering this statement, next couple of years could be quite dynamic in the Indian market which seems to have hit a lull.
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