Ecommerce is growing business segment and has gained a popularity in recent times. The culture and infrastructure are two main barriers to entry in various economies, but slowing and gradually almost every nation in moving to e-commerce. USA and China are currently dominate in terms of e-commerce spending. The value of online sales in India is currently predicted to reach $48billion by 2020.
In 2015, Alibaba Group Holding Ltd (NYSE: BABA) first invested in Paytm while Amazon has invested over billion into growing its operations in India since 2014. As per the Reuters news, Alibaba bought 36.31% stake in its e-commerce subsidiary for $177 million. Now Alibaba and its Ant Financial affiliate own a majority stake in One97 Communications, Paytm’s parent firm, 40% of the Paytm business, and now just over one-third of Paytm e-commerce. Furthermore, recently Paytm rolled out an update to its mobile apps which introduce a distinctly Alibaba-like feature- Paytm Mall. Like Alibaba’s T-Mall service, Paytm Mall features “trusted seller passing strict quality guidelines and qualification criteria. It is selection-based rather than an open field like most other e-commerce services in India. After having dominant mobile payment service Alipay, which has 450 million registered accounts, Alibaba is expanding its markets for comparable payment services across Asia and beyond via its fintech affiliate.
Ant Financial recently acquired US based MoneyGram for $880 million and has invested $ 200 million investment in Korea’s KakaoPay. It is also said that the company is investing in Thiland’s Ascend Money and the Phillippines’ Mynt. To fund this transaction and other M&A, Alibaba Group is planning to raise $3 billion in debt. The move would extend its and Alibaba’s reach further.
In China, Alibaba Group is far ahead of its counterparts. Its e-commerce platforms are connecting small business enterprises in remote, rural and under-developed regions of China directly to the global market place. The Alibaba platform ecosystem has enabled hundreds of thousands of e-tailers in the name of Taobao Village network across China. Alibaba is closely working with the Chinese government to build e-commerce capacities into the construction of China’s One Belt One Road (OBOR) initiative. Beijing has a $100 billion war chest at its disposal, which it plans to use to accelerate the development of finch and e-commerce. Alibaba Group is currently in discussion with the World Trade Organization to roll out a global trade platform eWTP, which could expedite, simplify and substantially increase the volume of cross-border e-commerce transactions.
Alibaba Group has a strategy to continue form collaborative partnerships with U S firms and open –source its product development. Alibaba has also taken effective steps to combat fraudulent transactions and the sale of knock offs on its sites. Alibaba has a laser focus on payments. It is a key strategic battle to winning out e-commerce.