Alibaba, China’s e-commerce tycoon, has aroused worldwide concern on its three generous investments in Zomato, BigBasket and XpressBees in India over the week before last week, among which Zomato is a takeaway platform, BigBasket an e-commerce platform for fresh food and XpressBees a logistics company. The three investees are to India what Meituan-Dianping (backed by Tencent), Yonghui Group (backed by Tencent) and Cainiao (Alibaba’s logistics arm) are to China. Here is a brief introduction to the investments.
BigBasket is India’s largest e-commerce platform for fresh food. It has banked an investment worth USD300 million from Alibaba, the Abraaj Group, International Finance Corporation and Sands Capital Ventures. The investment will further cement BigBasket’s position as the frontrunner in the fresh food industry, and also facilitate the synergy between BigBasket and Alibaba-backed Paytm, posing a threat to two e-commerce giants Amazon and Flipkart.
Zomato, India’s largest restaurant review and rating platform, will be valued at USD1.1 billion after having received an investment of USD 200 million from Ant Financial, and its sales volume runs ahead of that of Swiggy, the largest takeaway platform in India.
Alibaba invested INR2.27 billion (approx. RMB2,200 million) to XpressBees, an Indian logistics start-up, to address the delivery problem and advance the development of Paytm Mall, an Indian e-commerce platform owned by Alibaba. For now, Paytm Mall cannot compete with Amazon and Flipkart regarding product delivery.
Competition with Amazon:
Europe and America have been the strongholds of Amazon. To avoid confrontation, Alibaba bets on Southeast Asia and India that are at the beginning stage of Internet development to march into the international market. Therefore, the company has made great efforts to build local eco-system in the two areas since 2014.
In Southeast Asia, Lazada, which has been acquired by Alibaba, is always second to none in e-commerce. What is interesting is that Snapdeal, an Indian company invested by Alibaba, is struggling for survival. Determining to ramp up its presence in the market, Paytm launched Paytm Mall, 60% owned by Alibaba and Ant Financial, in the second half of 2016. And now, it is the third largest e-commerce company ranking only after Flipkart and Amazon.
Success of Paytm Mall reignites Alibaba’s ambition. The investment in BigBasket and XpressBees holds out the prospect of establishing the synergy with Paytm Mall, India’s answer to Tmall, and further expanding its presence in the Indian e-commerce market. At last count, the Indian retail market is valued at USD672 billion, and it holds great promise since now the penetration rate of e-commerce players in the market is less than 3%. Both Flipkart and Amazon are based on self-run B2C, leaving Paytm Mall, a follower of Tmall, the lion’s share of the market.
Although at present, Paytm is the dominant escrow-based online payment platform in India, Phone Pe from Flipkart and a yet-to-launch online payment, the like of WeChat, by Whatsapp are waiting to take over the market. Therefore, Paytm is glad to see the investment in Zomato, BigBasket and XpressBees in that the eco-system can not only help Alibaba expand its market share, but also invite players from multiple industries to join in, which will absolutely lead to the further development of Paytm.
An unexpected participator—Tencent
Except for Amazon, Alibaba also has Tencent to compete with in India. But without WeChat, a prevailing social app in China, Tencent has to spark a fierce rivalry with Alibaba in the Indian market. One of the prominent cases is Flipkart, who has received Tencent’s investment. Last week, Tencent-backed Meituan-Dianping had participated in a USD100 million Series F round in India’s food delivery firm Swiggy.