Chinese e-commerce giant Alibaba looks East and down South Asia for growth as China market matures
Alibaba Group Holding Ltd., its business maturing at home in China, is seeking out growth in India and Southeast Asia.
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. Southeast Asia is marked to be a market with over 500 million potential consumers.
Goldman Sachs Global Investment Research projects e-commerce sales in India will rise to $127 billion in 2025 from $11.2 billion last year.
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.
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.
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.
“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.