Alibaba Entering India: A major breakthrough to Indian Ecommerce Market

A new battleground for old rivals is emerging in the Indian ecommerce ecosystem. Alibaba Group has been slowly and steadily increasing its footprint in India, to take on ecommerce giant Amazon in the country. While Amazon runs its own shop, Alibaba is creating a portfolio of investments to grab a slice of the ecommerce market.

The Chinese firm is looking to partner with e-commerce firms such as Flipkart and Paytm Mall for the service and launch it within this year.The firm plans for launching an e-commerce service around content platforms in India.  

Alibaba is entering India with its UCWeb browser app. The platform will challenge the established Indian ecommerce firms.The Chinese firm has been watching India and participating in opportunities. The company is also an investor in an Indian e-commerce and payments wallet, Paytm. The Chinese giant would include online movie ticket bookings in the app. The proposition will lead to Alibaba compete with BookMyShow and Paytm.

The entry in Indian market may impact Paytm. Alibaba holds 30.15% stake in Paytm, which runs a marketplace Paytm Mall and Payments Wallet.

Why Alibaba Choose UC Web?

Major reason why Alibaba selected UCWeb is because of its popularity in India. UCWeb has 1.1 billion global downloads. The company claims that half of these downloads are from India. UCWeb also has 130 million monthly active users in India. The app is more than just a browser. UCWeb is used to consume news and content discovery platformUCWeb has a lot of traffic in India, and it’s exploring chances of converting them in transactions.

India’s internet economy is expected to double from US$125 billion as of April 2017 to US$ 250 billion by 2020, majorly backed by ecommerce. India’s E-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51 per cent, the highest in the world.

Overall, the Indian e-commerce market is maturing with the entry of large international players.Another big backer of Indian startups, SoftBank, is an Alibaba ally. SoftBank is one of the Alibaba’s early investors—it first invested in Alibaba in 2000—and owns about 25% in the company.

SoftBank is also an investor in Flipkart. It is thus unlikely that their respective portfolios will bleed each other for long, though neither Flipkart nor Paytm has shown any sign of joining hands yet. The existing ecommerce players will find the ecosystem squeezing them further.

Amazon Vs Alibaba

The business model followed by Amazon consists of an ecosystem which has many moving parts.Alibaba uses software to exchange goods instead of warehouses whereas Amazon has largest network of warehouses.

Amazon has bigger market cap of $730 billion but Alibaba stands out to be more profitable compared to amazon with operating margin of 28%.

Last year Alibaba broke their own record in total sales volume and the number is almost the same as India’s entire ecommerce industry. 

It remains to be seen which strategy will pay dividends ,but Alibaba’s steady surge is something Amazon can not afford to ignore.

Alibaba’s entry into B2C retail will give be a boon for consumers. Alibaba might bring in better choices to the consumers, and that means lower prices and more offers.Every city and village might now be accessible to home delivery of the best brands and products from across the world.Small and medium enterprises may become more accessible as they could reach millions of customers online across India.The increased competition entering at this phase is likely to keep all the mazor ecommerce players on their toes which is going to prove value to customers.