Alibaba Exploring Opportunities To Directly Enter Indian Market

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.” 

Alibaba To Introduce Flea Markets In China

Alibaba is investing $15.4 million to introduce flea market in over 100 cities of China.

Alibaba Group Holding is the biggest and largest online retailer in the world. The company was already one of the largest but considering the performance it just put in the current fiscal year, it is set to surpass US Wal-Mart Stores as the biggest retailer in the world.

The Chinese tech giant, however, is now planning to enter a market where it has not already set its foot before. According to the company’s owned South China Morning Post, it will invest almost $15.4 million (100 million Yuan) in order to develop a digital flea market in China this year.

Alibaba Group previously expressed its wish to open a physical store soon that would further help the business. Now the idea of developing a flea market would not surprise many people but it is surely not its strength.

In June 2014, Alibaba came up with a mobile app, which offered used goods and items to the customers. The app was called Xianyu and within a short span of time, it became one of the most used mobile applications in the country. A news website yicai.com reported that Xianyu has almost 100 million registered users.

According to a report, nearly 170 million used-goods have been traded through the mobile app since then. The $15.4 million (100 million Yuan) investment will help Alibaba in introducing flea markets in 100 urban cities of China. This will allow the users of the smartphone app to trade purchase, sell, and trade second hand products physically in local areas.

CBNData – a reputable Shanghai-based data analysis firm – said that with this move, the flea market trading or used-good trade market could easily reach the 400 billion Yuan mark by the end of this year in China.

Alibaba suggests that it will provide convenience for the users. Users of Xianyu app can easily manage their stores in flea market through the mobile app. They can take and upload images of their products, put an impressive caption on the images, and can add promotional voice notes in order to increase the trades.

The company said, “Both buyers and sellers can get a sense of belonging, and recognize and assess each other, which makes the app more akin to a social network than a shopping website.”

The transactions of buyers and sellers will be supported by Alibaba’s online payment service Alipay, which also works like a money remittance service.

Alibaba And Tencent Rivalry Takes A Twist

Meituan joins forces with Tencent resulting in Alibaba agony.

Alibaba Group Holdings Ltd. is said to be the biggest stakeholder in Meituan but is not content with the online platform’s recent move. The company decided to opt for a merger in October with Dianping which is backed by Tencent. So after this move, Dianping invested another $1 billion in the merged commodity.

So now Alibaba Group is deciding regarding the streamlining of the proceeds they have observed from the sales of its stakes to Ele.me – an app that delivers food being a direct competitor to Meituan-Dianping.

The reason why BABA wishes to invest in Ele.me is simple since it wishes to take Tefncent along with other growing Interhnet based companies like Baidu down.

If the company is successful in rapidly proliferating the mobile Ecommerce service, the company has now decided to offer consolidation since by devising strategy that revolves around big discounts has actually failed to bolster businesses. Consumers are not loyal to the brand since they start to withdraw once the offering ends.

This has actually given birth to the turf battle that is gradually making its way tyo similar industries.  Certain vendors in an informal manner have been approached by the sales team of Meituan-Dianpingso that they ditch Alipay the payment system, by Alibaba.  They are now encouraging the consumers to opt for the alternative platform designed by Tencent.

Meituan-Dianping on its own has also asked vendors to sign an exclusive pact with Alipay instead of the recent Koubei venture that the company had launched a few months back.

According to the Financial Times, “Further clashes are being set up by changes to the companies’ business models. For example, Meituan, which accounts for four out of every 10 movie tickets sold in China, is now considering a move into film distribution, where it would compete with Alibaba’s Ali Pictures.” This has actually resulted in the executives at Alibaba to approach the investors and acknowledge them that consider Mr.Wang Xing, the founder of Meituan as “ungrateful”.

On the other hand, the local battles might just result in yielding the bargains for the upcoming investors considering the competition in this business. This actually encompasses Digital Sky Technologies. Tiger Global, andthe US investment fund. This is a great time for them to secure better terms with the Internet giants in China

However all those investors that have already invested in Meituan- Danping need to be worried now since a lot is at stake considering the present rivalry.