Alibaba Group Holdings is planning to buy, or invest in, an Indian logistics company specializing in deliveries for online retail players. And it has already held talks with Delhivery and Xpressbees Logistics, regarding this. According to sources, the Chinese giant also has plans to get Paytm to spin off its marketplace business and even to top it up with more capital. Alibaba and its affiliate Ant Financial together own about a 40% stake in the Noida-based Paytm.
All these initiatives are a part of an effort by Alibaba to build the “iron triangle” the term coined by founder Jack Ma. The plan is to create a solid triangle of businesses in e-commerce, payments and logistics, and position it to challenge the currently dominant leaders like Flipkart and Amazon.
Alibaba Group has time and again mentioned that they see tremendous opportunities in India and are committed to developing in this market for the long term.
Once Alibaba finalizes its plan and makes this investment in a logistics company, it will also give it a major say in operations. The investment will be decided in 4-6 months, once Alibaba is ready to launch its horizontal marketplace platform in India. Securing control over logistics is important because infrastructure comprising roads, storage and vehicular assets, as well as skills, regulations and systems are relatively under-developed in the country.
Top executives from Delhivery and XpressBees have already met the team which Alibaba has set up for the India entry. This group is led by Alibaba’s Global Managing Director K Guru Gowrappan and Bharati Balakrishnan, the first top executive hired by Alibaba to build a consumer-facing business in India. Alibaba executives currently work out of Paytm’s headquarters.
Besides owning a stake in Paytm, Alibaba owns around 5% of Delhi-based online marketplace Snapdeal. It held investment talks with Flipkart, but the two companies were not able to reach an agreement on valuation and terms. Winning in India has become critical for Amazon, after it lost out in China to Alibaba. Last few weeks have been full of news about Amazon investing more and more money in its India unit.