After trying every avenue for half a decade — the $700 billion Alibaba Group and founder Jack Ma have all but given up on India. Why did the world’s largest e-commerce company fail in what could have been one of its largest markets?
The Information interviewed over a dozen former and current employees of Alibaba and Indian companies to map Alibaba’s India adventures —a “tale of missed opportunities and bad luck.” Here are the key takeaways.
In 2015, as India’s economic activity outpaced China’s, the world’s tech companies (including China’s) were looking at India as the next big opportunity.
Alibaba wanted to build an “ecosystem” of businesses in India —from payments and e-commerce to logistics and cloud computing. It was ready to invest in the right companies, or start its own.
Alibaba’s UCWeb Browser was already one of India’s most popular —and Alibaba invested about half a billion dollars each in Paytm and SnapDeal.
Jack Ma met PM Modi and Alibaba started looking for an “anchor partner” in India —a conglomerate with local clout that could help it develop its businesses. Their first choices were obvious.
Tata: In 2016, Alibaba’s co-founder and Tata’s Cyrus Mistry started exploring a joint venture—one that could have changed Indian e-commerce forever. The goal was to combine Alibaba’s technology with Tata’s assets, and they even signed a preliminary agreement. But soon, Mistry was ousted from the Tata Group, and the Alibaba deal became history.
Ambani: In 2017, Alibaba executives met with Mukesh Ambani in a secret meeting to potentially work together, but the effort was unfruitful. Alibaba’s top brass then went to Adani and Biyani’s Future Group, but nothing came of it.
Flipkart: In 2016, Alibaba tried investing in Flipkart, but wanted a good deal. Flipkart wanted a valuation of $15B though, and talks fell through.
With SnapDeal floundering, Alibaba invested $200 million in the newly spun-off Paytm Mall, hoping to recreate the success of its Taobao and Tmall marketplaces in India.
But that didn’t work out too well, either. Frustrations among staff grew and the company continued to struggle to find success in India.
Meanwhile, India became a battleground for Amazon and Walmart (which acquired Flipkart in 2018).
With a market share of less than 5%, Paytm Mall raised half a billion dollars in 2018 again — from Softbank and Alibaba.
The bottom line: Alibaba’s flagship India investment — Paytm —started losing market share with the launch of UPI, and the resulting success of Google Pay and Walmart’s PhonePe.
As users started shifting to Google Chrome, the Indian government banned 59 Chinese apps – Alibaba’s UCBrowser, Vmate, and UCNews among them, delivering a huge blow.
Although Alibaba led a $300 million round in e-grocer BigBasket, that investment too has failed to mature. It is now expected that Tata will buy Alibaba’s minority stake in BigBasket.
Tata and Reliance now have strong plans to capture India’s e-commerce market and billions of dollars to back them up.
One analyst said that Alibaba underestimated what it would take to succeed in the Indian market. We think he might be right.
