The ‘Ma’ of E-business is here!
Introducing a man who doesn’t need an introduction, Jack Ma or Ma Yun, founded Alibaba in December 1998. He is the first Chinese entrepreneur to appear on the cover of Forbes magazine. The richest man in China, 18th richest in the world. His companies currently perform 80% of China’s total online sale. Started off with just $20,000, his firm now values at $25.4 billion on NYSE. Once criticized as a Shark killer, he turned himself into a loved philanthropist. Alibaba.com is one of world’s top 20 most visited website in the world, dealing in more than a billion products. Not to mention, they hold the world record for maximum online sale on a single day, How much? and the answer is… US$9.3 billion on November 11,2014. Fascinated? wait…Here is another interesting fact, He did all this without ever writing a single line of code.
So as it seems, he already have a bigger slice of the cake. And now… he is coming after the cherry, The prized Indian retail market. Indians now buy stuff worth $20 billion online as per independent calculation. As per Goldman Sachs, this is likely to grow a whopping 15 folds to 300 billion by 2030. So even if you feel there too much crowd already, there’s still space for many more. And Jack Ma would definitely try to reserve himself an entire presidential Suite.
Since now you know about Mr. Miyagi of this business, let me introduce the Karate kids from Indian corridors, who are already taking a lesson or two from the master to be or beat him on their home turf.
In the blue corner, meet Flipkart.com, the Daniel San. The billion dollar boy of Indian e-tail, currently valued at US$ 11.5 billion. They stand tallest among all Indian players. Saying they started it all, isn’t an overstatement. Inspired by Amazon.com, Flipkart started with just books, digging deeper into computers, electronics and anything they could manage to sell online. They were the first one to sign exclusive contracts with big shots like Motorola, Xiomi and helped each other dominate the ever demanded cell phone markets. Imagine that, while Xiomi MI3 and Moto G was only being sold on Flipkart. The local markets and other player were making a lot of money by just selling out accessories for the much-loved devices.
The founders, Bansal duo (Sachin & Binny) have always maintained that they were inspired by Amazon.com model since inception, not to mention they worked at Amazon India in the first place. Until recently, when they publicly displayed their affection for Alibaba.com and said “ Our role model now is the Alibaba Group, more than Amazon.” Flipkart.com’s next target is to reach US$15 billion valuation mark by the end of 15–16. If everything goes as planned, Flipkart will again be first in its league to do something, others just dream of, an IPO. They started on this road with the acquisition of
Myntra.com, then raising a US$ 2 billion in last year alone. Currently, there focus areas include improving the supply chain in remote areas, loyalty programs for returning customers (better than Flipkart-first) and registering a massive seller base. They have the fire power and the objective is simple, to retain what they are known as “The leaders of Indian Online Selling”.
If you think the blue guy is unbeatable, meet the fighter in the red corner. Snapdeal.com, a Delhi-based firm started by selling salon and movie deals. Suddenly they moved into computer and peripherals after realizing a huge potential customers base. Later, they nailed every sector that has an online presence. Snapdeal.com enjoys 5X larger seller base than any other online platform. Led by a deadly combo of IIT and Wharton University of Pennsylvania, they know where to hit, when and how. They are Mr. Ratan Tata’s personal favorite and gained an undisclosed investment from him last year, Fancy!.
Snapdeal.com never handled logistics from day one, India’s top B-school present them as an ideal example of Just-in-time (JIT) inventory. And, as they say, JIT is easy to desire but too hard to achieve. Snapdeal recently tried to outrun Flipkart by making a step ahead and knocking the Alibaba’s door. The funding talks even started in March, but could not be concluded due to the difference in opinion. Had they merge, Snapdeal would have catapult with a much faster pace and a whole new space.
Even without the merger, Snapdeal is the player of the top most league. They have grown at a rate of 600%, attracted investments from big names like Premji Invest, Temasek, and Ebay. Snapdeal is now going to focus aggressively on the fashion category with target sales of over INR 6,000 Cr. Launch specialized crafts store and warehouses, or fulfillment centers, in 15 more cities, metros. Snapdeal is a rookie that can knock out its opponent by surprise.
Excited! while you were thinking the fight was being fought in the ring. It was actually a member of the audience who has won the first bout. Due to none other than the shark killer, Mr. Jack Ma, India’s oldest and biggest mobile payment platform Paytm and launched itself into the world of online selling. Vijay Shekhar Sharma, Founder Paytm visited Jack Ma for a 20 minutes meeting ending up having a Two-hour discussion and came out with US$575 million valued against a 25% stake. Not just money, Jack Ma arranged special training sessions for Paytm officials for next 3 months, gave them a lesson in Application security and supply chain management. Mr. Vijay not only shares a business connection but a friendship with Jack Ma himself. During childhood, our mother always taught to be in good company. Well, Paytm is certainly in the best pair of hands at the moments, and the benefits have just started coming in. Alipay, the payment arm of Alibaba, has helped develop a fraud detection system for Paytm, dropping the fraud rate from 1% to 0.1%. Alibaba troops are on a continuous voyage between Hangzhou and Noida giving them lessons on the supply chain.
There is a special connection between Paytm and Alibaba, both believe in a common ideology of business, “frequency of business holds above the volume of business”. Even Jack Ma and Vijay Sharma share a common love ‘Payments’. Paytm started as a payment wing and would not give up on who they were for a new partner, and Alibaba prefers Paytm for the same reason. Paytm is a market leader in mobile/online payments, given their customer base, and Alibaba in their Quarter-back they can touch down on any turf.
Paytm success would not only come owing to this partnership, but their are other specific reasons as well. Such as:
First, They are inheritable mobile-first while other moved from web to mobile and still struggling. Paytm moved from mobile to web. And till now they have seamlessly distinguished their payment business from online shopping.
Second, their love for an unorganized sector. While other players play safe in areas like grocery, stationery etc. Paytm throws caution to wind and plays all-in.
Third, believe it or not, they host India's second largest seller base currently and prospect says they will reach 1 lakh sellers buy the end of this financial year.
They project themselves as masters of M-commerce rather e-commerce. So, while many experts believe that Paytm are running behind, they have little idea, that Paytm is creating a league of his own. Thanks to the learning from the great master (Jack Ma), Paytm has pulled off this massive transition within a short span of just 9 months.
You think, you can guess the real winner of this rumble yet?. Be sure, that the battle royal has just started and this will turn into a bloody brawl. Most other countries have a single dominant player — Amazon in the US, Alibaba in China, Rakuten in Japan, MercadoLibre in Brazil. But India has five companies competing in this space (Flipkart, Amazon, eBay, Snapdeal and Paytm) — with large niche players as well, like Myntra (fashion), Lenskart (eyewear), Pepperfry (for furniture).
If you are a data lover or market analyst, you have some quality job in hand. Or if you are just an avid i-buyer like me, who has eye for the best deals available, then just sit back and relax. Cause my friend, you are going to be served with choices, you would love.
Based on personal opinion and independent study. Sources: Forbes India, Economic times, Mint, Quartz and other open source marketing journals.