To challenge the supremacy of world’s rapidly growing online stores Flipkart and Amazon, Alibaba Group Holding Ltd of China has begun discussions with Mukesh Ambani’s Reliance Retail Ltd to emerge into a mega Indian retail joint venture (JV), by investing minimum $5 billion, said two people knowing about the matter. Alibaba Group is planning to takeover large stake in Reliance Retail to be a powerful organization in digital market and also expand its physical retail businesses in India.
These talks also indicate that the two powerful companies that are planning to come together in India’s emerging e-commerce market will intensify the battle within the market leaders.
However, Reliance spokesperson has informed that no there has been no such talks between Alibaba or anyone to take stake in Reliance Retail Ltd.
People said, Jack Ma, Alibaba’s executive chairman met Mukesh Ambani, Chairman of Reliance Industries Ltd to discuss the proposal and other issues including a strategy to create large omnichannel retail entry with proposed JV.
One of the two people also stated that Alibaba is planning to take about 50% stake in Reliance Retail which will have about $5-6 billion of Alibaba’s investment or result in strategic JV with smaller stake by Alibaba.
The second person said that this deal is very critical for Alibaba, after Reserve Bank of India (RBI) has directed Paytm, in which Alibaba has 49%, to stop integrating new customers due to its shareholding pattern. As per the reports from Mint on 1st August, RBI had concern that the Chinese company has Paytm’s customer data access and it asked Paytm to improve its security mechanisms to prevent customer information. He also added that Alibaba holds stake in Paytm with aim to benefit from its e-commerce and digital wallet business in India. Reliance Retail is also planning a model like Paytm, and Alibaba will take benefits from it in the way it was gaining by associating with Paytm.
Alibaba’s two world’s largest and popular online markets Taobao and Tmall achieved total transaction of $478.6 billion for financial year 2016 and hope to double this figure to over $900 billion by year 2020. As per the report of February 2018, Taobao had about 580 million active users monthly while Tmall had about 500 million.
The consumer-to-consumer website Taobao and business-to-consumer website Tmall has over a billion of products and are among the 20 most visited sites worldwide.
Reliance Retail, a part of Reliance Industries Ltd, is largest retailer in India considering revenue which offers food, groceries, lifestyle and apparels, home-care products, electronics, agricultural equipment’s, travel services, entertainment and comfort, health products, etc.