As Amazon.com, Inc. (NASDAQ:AMZN) boosts its investment in India dubbing the country its next trillion dollar opportunity its competitor in Asia – Alibaba Group Holding Ltd (NYSE:BABA) is trying to match it.
As per reports, Alibaba is seeking a stake in Flipkart, India’s top e-commerce company. Incidentally, Flipkart is Amazon’s main competitor in India boasting a 44% share of the country’s e-commerce market, almost three times that of Amazon’s at 15%.
Alibaba already has a stake in a major Indian e-commerce organization called Snapdeal and a 40% stake in the Indian online payments company PayTM. It looks like Alibaba is seeking to expand its presence in India via Flipkart. If Alibaba clinches the deal with Flipkart, it would mark a consolidation of e-commerce companies in India and pose strong competition for Amazon.
Marketing research firm eMarketer has reported that e-commerce transactions in India are expected to increase from $14.0 billion last year to $55.0 billion in 2018. Retail e-commerce in India increased at a 134% rate in 2014 and 129.5% last year making it the quickest growing nation in Asia Pacific in the retail e-commerce domain.
Online retail presently makes up about 0.8% of all retail sales in the country and is predicted to increase to 4.8% by 2019. With the quick rate of growth of e-commerce in the country and the vast potential opportunity already leveraged by Amazon, Alibaba seeks to consolidate its position.
Flipkart and Snapdeal together have a 75% e-commerce market share in India. If Alibaba snaps up a stake in Flipkart, it can boast a very powerful position in the country via stakes in both these organizations. India is Alibaba’s its second biggest market after China. The company hopes to rope in 10 million Indian enterprises on its B2B platform in the coming years. It will concentrate on expanding its presence among retail customers.
As organizations seek to leverage the proliferating e-commerce market in India, Alibaba’s stakes in main players in the country could help it build a strong presence and pose a formidable challenge for Amazon.