Alibaba appeal prompts Flipkart to tap Chinese lesson

Sachin Bansal says India is different. We are going to build it in a different way here

Alibaba Group Holding, China's largest e-commerce company, has fans in India seeking to script a similar path.

Sachin Bansal, co-founder and chief executive officer of Flipkart.com, India's biggest online retailer, said on Thursday that the Chinese company is a role model.

"Back in 2008, Amazon was the most dominant player in the market and the role model for a lot of people," Bansal, 32, said in an interview. "India is different. We are going to build it in a different way here. For example, our role model today is actually Alibaba more than Amazon."

Seven-year-old Flipkart on Thursday agreed to acquire Indian clothing retailer Myntra.com in a move that will widen its lead over Amazon.com in Asia's third-biggest economy. India's internet retail market is estimated to expand sevenfold to $22 billion by 2018, according to CLSA Asia-Pacific Markets, and competition from rivals such as EBay intensifies.

Flipkart is seeking to emulate Alibaba in going beyond e-commerce to build related businesses that include logistics, internet payment gateways and mobile shopping solutions, Bansal said in Myntra's office in Bengaluru, where most walls had illustrations of models in colorful dresses. The two nations's markets are similar, consumers tend to behave in comparable ways, and e-commerce companies have had to build support infrastructure from scratch, he said.

Size of Market

Unlike counterparts in the US and Europe, Alibaba has "developed the whole ecosystem: they play a large role in payments, they play a large role in seller development", said Bansal, who was a software engineer at Amazon before starting Flipkart in 2007. "There is a lot of learning from the Chinese e-commerce market that we are looking to take and then apply here,"

The size and scope of the two Asian markets are contrasting.

Flipkart had a 4.9 per cent share of the Rs 17,000-crore of internet retailing transactions in India in 2013, according to Euromonitor International estimates in a March report.

The value of transactions on Alibaba's platforms was $248 billion last year. The number of annual active buyers rose 14 per cent to 231 million, each placing an average of 49 orders over that period, according to Alibaba's filing on May 6 in what could become the largest US public offer ever.

China has about 618 million internet users. In India, the number of internet users is projected to reach 243 million by June, according to the Internet and Mobile Association of India.

The growth in China's e-commerce market has been fueled partly by a widespread use of smartphones and a greater willingness of its population to shop online, said Sandeep Ladda, who heads the India technology practice forconsultant PricewaterhouseCoopers in Mumbai. India has "a long way to go" before the market becomes comparable to China, he said.

"I don't think this is an analogy, these are different markets," Ladda said.