Industry News

Alibaba energizes its running B2B e-commerce segment in India to connect sellers on its portal

India: While the news of Jack Ma led Alibaba’s entry into the consumer-facing E-Commerce industry in India through the acquisition of 40% stake in Paytm, putting it against big players like Amazon, Flipkart and Snapdeal was still not over, the online Chinese tycoon moved a step forward to boost up its existing B2B venture in India. Alibaba has partnered with banks like IDFC Bank, Kotak Mahindra, NBFC arm of Aditya Birla Group and couriers like DHL and Delhivery to cater those small and medium enterprises (SME’s) that frequently buy and sell products in bulk.

Initially, Alibaba will target those SME’s who are focused on exports. IDFC Bank has emerged as the main partner to provide cross border banking services to sellers and offer then banking solutions. Though IDFC Bank and Kotak Mahindra Bank will be lending these sellers, majority of the working capital support for sellers will be diverted through their NBFC Partner Aditya Birla Group. Alibaba is building up its team by hiring professionals to boost growth and to compete with domestic players in this segment. The local players include India Mart and startups including Moglix, mSupply.com and Ofbusiness along with Amazon’s business which is still as a developing stage.

Alibaba.com has been operating in India since 2007 and claims that its portal had 4.46 Million registered Indian Buyers and sellers at the start of 2015. Alibaba runs B2B marketplace business in India and has been continuously registering profits for the last three years, though its sales have slipped starting last year, however, the company reported a net profit of USD0.2 Million in the financial year 2015 and nearly same in 2014.

According to TechSci Research, Alibaba’s decision is seen as a part of business growth strategy. This initiative of the company shows that they are actively focusing on B2B side by helping merchants with working capital requirement and logistics services. In order to provide more effective logistics services, Alibaba has partnered with courier companies like DHL & Delhivery for providing domestic as well as international support to Indian sellers, along with offering financial support through its tie-ups with various banks. Alibaba’s massive success is capped to its well synchronized and robust Merchant ecosystem, after coming to existence as an online B2B commerce company, that connected local Chinese manufacturers with overseas buyers. Now, the company is also expected to bring in Chinese vendors onto the site as they have great depth in the merchant ecosystem.

According to a recent report published by TechSci Research, India E-commerce Market Forecast & Opportunities, 2020”, the country’s e-commerce market is projected to grow at a CAGR of more than 36% during 2015-2020. E-services segment, which comprises online travel, online payments, online classifieds, etc., is expected to continue its domination through 2020. However, the e-tail segment that includes electronics, apparels & accessories, health and personal care, etc., is expected to witness significantly higher market growth compared to e-services segment over the next five years. During 2015-20, the western region is expected to remain the largest e-commerce market in the country. Major players operating in India’s e-tail market include Flipkart, Snapdeal and Amazon.