Last weekend caused a massive buzz (in addition to the Indo-Pak match of course!) in the Indian e-commerce segment as Alibaba confirmed its plans to enter India this year and significantly intensifying the already heated e-commerce battle in the country.
Now according to a report by the ET, PayTm, in which Alibaba alreadyholds a 40% stake, is in talks with the latter to raise $300-400 million (Rs 1,990-2,655 crore) for its marketplace business and spinoff the marketplace to let Alibaba organically expand in the country.
PayTm may spin off its marketplace business, which will have Alibaba as a majority stakeholder in that company and allow (the Chinese firm) to organically expand in India,
a person familiar with the matter told the ET.
He, however, did not disclose the valuation at which the deal is expected to happen but said that the other business categories of PayTm(digital wallet, payment banks, bus ticketing and travel, etc) would run as separate businesses.
Both Alibaba and PayTm have declined to comment on the report terming it as a market speculation.
Interestingly, according to another report by the ET, the Chinese e-commerce behemoth has got in touch with Tata Sons for a partnership to help Alibaba expand in the country.
Citing a person familiar with the matter, the report said that the Alibaba Group president Michael Evans and global managing director K Guru Gowrappan recently met Cyrus Mistry, Chairman of Tata Group to discuss the possibility of a partnership.
The meeting reportedly covered the scope of a partnership beyond just online retail as Alibaba is also looking to develop a strong backend system involving logistics, offline stores and omnichannel support to its e-commerce business.
And Tata Group may help the company to do the same as it previously did with its retail arm Trent partnering with world’s largest apparel firm Inditex to sell its Zara brand and an equal joint venture with UK’s Tesco, the world’s second-largest retailer. Tatas also helped Starbucks to enter India through their alliance with Tata Global Beverages.
Moreover, Tata Group has a wide presence and an incredibly positive brand image among Indians which could further help Alibaba in establishing its presence in the Indian e-commerce market which is expected to become a $100-billion market (including online travel) by 2020 from the present $16 billion according to a Goldman Sachs report.
And the entry of Alibaba is sure to cause a huge stir in the market currently dominated by the trio of Flipkart, Amazon, and Snapdeal.
Moreover, Alibaba, which sold goods worth $377 billion in 2015, is a much bigger threat than PayTm alone to these companies (who managed $16 billion worth sales in the same year in India) if it manages to establish itself in the country.