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1. What factors are prompting Alibaba to seek markets outside China?2. What factors are attracting Alibaba to seek out growth in India and Southeast Asia?3. Which company is Alibaba’s e-commerce rival in China?
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Alibaba Thinks Outside the China
Box
As its business matures at home, the Chinese e-commerce firm seeks
growth in India and Southeast Asia
0:00 / 0:00
Following its expansion into Southeast Asia, Alibaba is targeting India in an effort to increase revenue as
the Chinese e-commerce giant faces tough competition at home. Photo: AP
http://www.wsj.com/video/alibaba-targets-india-in-bid-to-boost-growth/43E98233-CF89-4260-AAD7F9779EA75E4B.html
By
NEWLEY PURNELL in New Delhi and
ALYSSA ABKOWITZ in
BEIJING
Aug. 12, 2016 5:43 a.m. ET
5 COMMENTS
Alibaba Group Holding Ltd., its business maturing at home in China, is seeking out growth in
India and Southeast Asia.
In India, the internet company in recent months has snapped up executives with experience in the
country’s fast-growing, highly competitive e-commerce sector, a sign it could be planning an
online-shopping push there. In Southeast Asia, Alibaba paid $1 billion in April for a controlling
stake in Singapore-based e-commerce startup Lazada Group, its biggest overseas acquisition to
date.
“We acquired the majority control of Lazada in an effort to start to serve local consumers in
Southeast Asia, and that’s something that’s going to be a very important potential market for us,”
Alibaba Executive Vice Chairman Joe Tsai said on a conference call Thursday after the company
reported revenue growth of 59% for its latest quarter. “It’s a market with over 500 million
potential consumers.”
The attention to other parts of Asia comes as Alibaba faces competition at home from ecommerce rivals such as JD.com Inc. and as it attempts to boost revenue outside of its core
commerce business.
Analysts say e-commerce in India, the world’s second-most-populous country, could take off the
way it did in China as broadband internet spreads and incomes rise. Goldman Sachs Global
Investment Research projects e-commerce sales in India will rise to $127 billion in 2025 from
$11.2 billion last year—though even with such growth the market would be dwarfed by China,
where Alibaba alone sold goods valued at three trillion yuan ($452 billion) in its latest fiscal
year.
ENLARGE
“We have decided to place some very strategically located
assets in that market,” Mr. Tsai said of India, calling the
push there and the tie-up with Lazada just “the start of our
international activity.”
A person familiar with Alibaba’s strategy said it is taking a
broad-based approach in India. It has a business-to-business
website that connects buyers and suppliers of goods such as
chemicals and minerals, but no stand-alone domestic consumer-to-consumer offering. That is an
area in which local startups are battling, the person said, and “the first winners may not be the
ultimate winners.”
In India last year, Alibaba led a $500 million fundraising round for e-commerce company
Snapdeal.com, while its financial-services affiliate, Ant Financial Services Group, paid more
than $500 million for 40% of One97 Communications, the parent company of online-payment
and marketplace startup Paytm.
The investment in Paytm, which makes a popular mobile wallet that can be used to pay for
services and products, ranging from electricity to iPhones, gives Alibaba an edge, the person
said. Nearly all Indian consumers coming online for the first time are doing so on low-cost
smartphones.
Recent hires suggest Alibaba is looking to ramp up its own consumer e-commerce offerings in
India. It has added Vinay Bhartia, a co-founder of Mumbai-based e-commerce logistics startup
Mypacco, as a senior executive, and recruited former Bain & Co. consultant Bharati
Balakrishnan, who previously held a senior position at Bangalore-based services-booking
platform LocalOye.
Alibaba, which declined to comment on the hires or any consumer e-commerce plans in India,
would be playing catch-up there against the likes of Flipkart Internet Pvt., which analysts
estimate accounts for nearly half of India’s e-commerce sales, and Amazon.com Inc., which has
pledged to invest $5 billion in the country.
ENLARGE
Lazada’s warehouse in Jakarta; Alibaba in April paid $1 billion
for a controlling stake in the Singapore-based e-commerce
startup. PHOTO: DARREN WHITESIDE/REUTERS
In a quest for customer loyalty, Flipkart and scores of
smaller e-commerce startups are spending heavily to offer
deep discounts. Flipkart, valued at $15 billion by
investors when it raised money last summer, doesn’t disclose its revenue, but says it is working
to become profitable.
Rival Amazon has built up robust warehouse and delivery technologies in India, and like its
peers provides services to suit the local market, such as allowing customers—many of whom
don’t have credit cards—to pay for goods when they are delivered. Other India e-commerce
complications: patchy internet connections, poor infrastructure and unconventional addresses
that make logistics operations difficult.
In Singapore, Alibaba Chairman Jack Ma, on a June visit to Lazada, told employees he had been
attracted to the company’s quick growth and ability to execute in new markets, according to a
Lazada staff member who was in attendance. He added that he sees Lazada as “a key cog” in
Alibaba’s international expansion, said the person.
In another move that will increase Alibaba’s exposure in Southeast Asia, Ant Financial said in
June it planned to buy a 20% stake in Thailand’s Ascend Money, an e-payment firm.
Alibaba said Thursday that fiscal-first-quarter revenue for its international commerce retail
business more than doubled from the year-earlier period ending in June, to $168 million,
primarily because of the integration of Lazada.
“We need another at least 1.2 billion population outside China,” Mr. Ma told investors at the
company’s headquarters in Hangzhou, China, in June, adding that he wants one day to serve two
billion consumers world-wide.
Write to Newley Purnell at newley.purnell @wsj.com and Alyssa Abkowitz
atalyssa.abkowitz@wsj.com

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