“We must create a kind of globalization that works for everyone and not just for a few“
– Nestor Kirchner
During one of the AGLA speaker series events, Michael Evans, President of the Alibaba Group, gave us an overview of the company’s global expansion strategies and roadmap. Alibaba sure is the undisputed king of e-commerce in China. Given Alibaba is comfortably poised to consistently capture the remaining market in China, it then becomes inevitable that they identify new markets to expand, so as to maintain the current rate of growth. With a population for 1.3 billion, it goes without saying that India almost immediately becomes a promising market for any e-commerce company that is looking to expand its global footprint.
The Indian e-Commerce Landscape
At present the e-commerce scene in India is quite fragmented. Even though there are quite a few players, every single one of them is crippled with some serious issues that are specific to India; Poor Infrastructure/logistics, low spending power of an average Indian consumer, unavailability/low quality of 4G networks in lower tier cities, low internet penetration and a good 400 million people without bank accounts, to name a few. Thus it becomes imperative that a basic ecosystem is ready before anyone can succeed in this market.
Going Forward – Solving the Indian e-commerce Puzzle
As I listened to Michael speak, it was clear that Alibaba views India as a very important market opportunity and intends to lay a strong foundation of ‘enablers of e-commerce’ before it builds its e-commerce ecosystem in this country. Instead of making a direct entry in the retail space, Alibaba has chosen to grow through partnerships. The past 18 months has seen Alibaba making an entry into India through various investments. Alibaba already owns 40% stake in Paytm (major e-wallet in India). They also have investments in Snapdeal. Alibaba has also been looking to see how they can partner with logistics companies from India. Therefore if you look at the overall strategy, the idea is to figure out the puzzle one piece at a time, to develop a healthy e-commerce ecosystem.
Alibaba looks to grow deep before they try to reach far
Road Ahead – Competition & Core Strengths
It will be interesting to watch the showdown between two of the world’s largest e-commerce giants (Amazon and Alibaba), develop/conquer the complex Indian market. While Amazon decided to build their own warehouses and enter the Indian e-retail space directly, Alibaba chose to enter India through partnerships.
By opting two very different market entry strategies both these companies have garnered a few strengths that are unique to each of them. Amazon clearly has a first mover advantage and it also enjoys the acceptance that comes with being an ‘American’ company. As for Alibaba the wealth of experience of having dealt with developing an e-commerce ecosystem from scratch, in a developing country, and building partnerships with local players, have helped them get great consumer insights and a rapidly growing user base.
“The benefits and consequences of globalization have a great deal to do with whether we’re intelligent and thoughtful about how we approach globalization, or whether we’re blindly accepting or blindly resistant“
– Ethan Zuckerman
It is too early to say which among these two approaches will work out to be successful in India. Sans all the competition, what matters most is that these companies have the power to make a difference to everyday lives of millions and to bring forth inclusive growth to a nation that has been grappled with glaring issues for decades together. When businesses grow they create jobs and bring forth new opportunities. The road ahead entails a lot of hard work and sleepless nights. However, empowering a peasant who resides in the remotest corner of an Indian village to the same level as a businessman who lives in New York City, is an incredible thought and a meaningful cause to work for. As an AGLA’er I have to say I am deeply intrigued as to what the road ahead looks like. All I know for now is, it is going to be some exciting times, going forward.
Divya Anne Joseph
A passionate traveler/reader, and an ardent believer of ‘Equal Opportunities for All’, Divya strives to work on meaningful projects that are meant to transform lives for better. She looks forward to get in touch with people who are keen on leveraging technology and innovation to build digital ecosystems that can create/facilitate sustainable businesses