Alibaba is the new Wal-Mart for Indian retailers as it wants to directly enter the Indian e-commerce market.
Alibaba Group Holding is looking to improve its international market presence in the coming times. It already dominates more than 80% of the domestic market share and is a dominant force irrespective of the competitor. Now it wants to build its business outside China and aim for global domination. The company’s main target is to expand in the Indian e-commerce market, which is currently the fastest evolving market in the world. On many previous occasions, it mentioned to not directly enter the Indian market.
Recent news indicates that Alibaba indeed is ready to directly enter the market and it seems to be the similar case that happened in Wal-Mart a decade ago. Alibaba Group has brought the Wal-Mart ghost for the Indian retailers. In April 2006, the US retailer ‘Wal-Mart’ hinted to enter the Indian retail market, which made most headlines during that time. On top of it, it threatened other retailers. Exactly seven months later of the announcement, Wal-Mart showed its intention to enter the Indian market but through a joint venture with the Bharti group.
During that time, Wal-Mart wanted to enter the wholesale domain. The direct entry was stopped by the foreign investment rules of the Indian market hence it had to work its way to enter through different means. Its entry set off the alarms in the retail sector as the entrance of a multinational retailer could mean sidelining the local established online or brick and mortar business.
Now the fear factor is similar in 2016, as Alibaba has provided a slight hint of directly entering the Indian e-commerce market. As it announced, panic buttons were pressed by the local businesses as the Chinese tech giant explores opportunities for directly entering. However, Wal-Mart has still not managed to enter as a multi brand retail or direct selling. The executives and the analysts who know the Indian e-commerce market agree on the fact that Alibaba is the new Wal-Mart for Indian retailers.
Alibaba is pitched against Wal-Mart in international market as well like never before. It recently announced that it had surpassed the Gross Merchandize Volume (GMV), which is the total value of goods sold on the online marketplace which Wal-Mart previously set in a fiscal year. Furthermore, the company also posted more sales than Wal-Mart and broke records. It is yet to announce its fourth quarter results in the coming time.
Analysts believe that Wal-Mart posted revenues of $482 billion in 2015 whereas Alibaba has done enough to touch revenues of $490 billion at the end of its fiscal year.
The executive chairman of Flipkart, Sunil Bansal, and the CEO of Snapdeal Kunal Bahl took this matter to Twitter. Mr. Bansal tweeted, “Alibaba deciding to start operations directly shows how badly their Indian investments have done so far.”
On this, Bahl replied, “Didn't Morgan Stanley just flushes $5 billion worth market cap in Flipkart down the toilet? Focus on your business, not commentary.”
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