Chinese e-commerce major Alibaba Group is in talks with two Indian e-commerce logistics firms, Delhivery and Xpressbees, for potential investments to build a strong logistics infrastructure before launching its horizontal marketplace platform in the country.
Citing two unnamed people aware of the development, The Economic Times reported also that Alibaba was considering infusing more funds into Paytm to spin off its marketplace business. Alibaba and its financial arm Ant Financial hold a stake of about 40% in Paytm.
Both Delhivery and Xpressbees work with Paytm as third-party logistics and eKYC partners, the report said.
Responding to VCCircle queries, an Alibaba spokesperson said, "We decline to comment on market rumours as a matter of company policy." Queries sent to Delhivery and Xpressbees did not elicit a response by the time of filing this article.
The report cited above claims that Alibaba is likely to acquire a major stake in a logistics company in India and the decision will be taken in four to six months before it launches operations in the country.
Alibaba Group is planning to enter India this year and is looking at opportunities to build the business organically or through other means.
"We are planning to enter the e-commerce business in India in 2016. We have been exploring very carefully the e-commerce opportunity in this country, which we think is very exciting on the backdrop of Digital India," Alibaba Group President J Michael Evans had said in March this year.
Alibaba's expansion in India could drive consolidation in the e-commerce sector and could make life difficult for Indian e-commerce firms, particularly market leader Flipkart.
In fact, several media reports suggested the Alibaba had held talks with Flipkart in the last quarter of 2015 to buy out the Indian e-commerce bellwether.
Alibaba also owns around 5% of Snapdeal, the second-largest Indian online retailer.
More importantly, an India entry will extend Alibaba's rivalry with Jeff Bezos-led Amazon to the South Asian nation. Alibaba is the world's largest e-tailer by gross merchandise value while Amazon is the biggest by market value and net revenue. Amazon had lost out to Alibaba in the Chinese market.
Amazon founder and CEO Jeff Bezos had recently announced that it would invest $3 billion more in India. This takes the total amount that the company is putting in its India operations to $5 billion; it had announced a $2 billion investment in 2014.
Xpressbees was first started as the logistics arm of baby products retailer Firstcry in 2012. In September 2015, the company was spun out from FirstCry as BusyBees Logistics Solutions Pvt Ltd to function as an independent business. The business has been built by FirstCry founders Supam Maheshwari and Amitava Saha.
The Pune-based company had raised about $12.5 million (around Rs 86 crore) in funding from existing investors SAIF Partners, IDG Ventures India, NEA, Vertex Ventures, and Valiant Capital in February this year. It claims to serve almost all the largest e-commerce players in the country.
Delhivery was founded by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan and Kapil Bharati in 2011. It has grown from a local on-demand delivery company to a full-fledged logistics services provider in less than five years. Owned and operated by SSN Logistics Pvt. Ltd, Delhivery had raised $85 million in its Series D round of funding led by Tiger Global with participation from existing investors Multiples Alternate Asset Management, Nexus Venture Partners and Times Internet Ltd in May 2015.
It had previously raised close to $40 million in various rounds from a number of investors after raising its first funding round from Times Internet in 2012.
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