Online Business-to-business powerhouse Alibaba.com is considering a joint venture in India, CEO David Wei (in picture) told Reuters yesterday. Interestingly, Wei said that the company is not looking to be a controlling stakeholder.
Alibaba’s Indian Base
In June this year, Alibaba had announced that the company had crossed 1 million SME members in India, adding around 40,000 SMEs a month and virtually doubling its base over a little over year. Wei had said then that India is Alibaba’s largest supplier market after China.
Bear in mind that at that rate, it’ll be a long time before India comes even remotely close to surpassing China at Alibaba: 31.62 million of Alibaba’s total 40.25 million registered users come from China, and only 8.62 million from the International market, as per an earnings release in May. Infomedia18, with whom Alibaba had announced a “multi-year strategic partnership” last year, has been helping the company with on ground support: customer service, sales and marketing – including on-ground events like Open Sesame (details) for popularising the B2B platform.
Important metrics in this space are registered supplier base, unique buyers and most importantly, paying customers. A large supplier base and adequate promotion attracts the buyers, and converts the supplier base into paying customers.
Why Not Go Solo?
If India looks like it’s going to be a key supplier market for Alibaba, why doesn’t the company go solo? Undoubtedly, the media support that Infomedia18 and the Network18 group can leverage among a business audience in India is significant. If Alibaba is keen on continuing its relationship with Infomedia18, then a JV makes more sense than a “strategic partnership” – Infomedia manages a publishing business and is in the process of setting up a yellow pages business, so a JV with a separate management would mean management bandwidth dedicated to growing Alibaba.
Competition
In India, Alibaba competes with the likes of TradeIndia.com and Indiamart.com, both B2B marketplaces. Indiamart had raised an undisclosed amount of funding from Intel Capital earlier this year, and is a BCCL Private Treaties partner. We’d done a 3 part interview with Indiamart CEO Dinesh Agarwal post the funding:
Part 1: Why The Upturn Made IndiaMart Raise Funds
Part 2: “No Single Category Contributes More Than 10% To Our Revenues”
Part 3: On Competition From Alibaba & TradeIndia, Revenue Streams; Auctions & Marketplaces
Earlier, in July, Indiamart announced that the company had recorded a 40 percent year on year growth in revenues in 2008-09, and a 52 percent growth in supplier registrations.
Note: The Alibaba Group is expected to announce its interim financial results on August 13th 2009. We’ll keep an eye out for any India specific announcements.
