Alibaba B2B shuts India offices as it expands reseller plan

Last year, Jack Ma-led e-commerce giant Alibaba announced it was strengthening its India business as it launched a reseller platform. However, the scaling down of the Chinese company’s physical presence in the country, that came alongside the reseller plan, remained unsaid.

Over the past few months, Alibaba.com, the business-to-business segment of the group, shut down all its offices across the country, it is learnt. There were at least four offices in India — in New Delhi, Mumbai, Ahmedabad and Chennai — set up for the business-to-business (B2B) operation since 2008. The office shutdown meant 30 employees employed with the company had to leave as well, a source in the know of the development said.

The drastic revamp in Alibaba.com’s business coincides with the parent company’s plan to enter India’s e-commerce market directly. In fact, the group is leasing space as well as hiring for the proposed new business. Also, US-based rival Amazon is scaling up its B2B business in India currently.

CHANGING STRATEGY

• Alibaba.com, the B2B business of the Jack Ma-led company, has one million suppliers in China and 250,000 overseas suppliers globally
   
• It has 110 mn buyers all over the world, 4.5 mn registered users in India as of December 2015
   
• Apart from India, it operates through resellers in Malaysia, Thailand, Vietnam, Turkey and other markets
  

 

India’s B2B segment of e-commerce is currently valued at $300 bn
 

By 2020, it is set to be valued at around $700 billion against $6.7 trillion globally

A source close to the company pointed out that the group operates its B2B business from a not-so-large office in Mumbai, while letting the third-party resellers to run it from their own locations across the country. The source also said resellers were talking to many of Alibaba.com’s employees for offering them job.

Replying to a questionnaire on the office shutdowns and termination of jobs at the B2B business of the company, a spokesperson at Alibaba.com said, “India is an important strategic market for Alibaba.com. That’s why we launched the reseller strategy in India last year. We believe that by going through resellers, we are able to tap their resources, networks and knowledge to more efficiently serve a burgeoning Indian SME (small and medium enterprise) community in India.” He added the reseller strategy would help Alibaba.com better sell and service the premium memberships in the market. “Alibaba.com remains committed to the India market and to connecting Indian SMEs with the global market.”

From 4.5 million now, the number of registered members in India is set to rise to 10 mn in a couple of years, an official had earlier said.

The reseller strategy is not unique to India, but is in practice in other parts of the world as well including in Malaysia, Vietnam, Turkey and Thailand, says a source.

A top executive at a major B2B company said, “Alibaba has been reducing its direct B2B presence in almost all markets for the past eight years now. This has been their strategy for long.” Globally, they are trying to operate their B2B business via reseller network, he said. “In India, they are still trying to figure out the right mix.”

The group, with investments in companies such as Paytm and Snapdeal, wants to target exporters and small-scale manufacturers through the reseller platform. The categories that are of interest in this space are apparel, jewellery, handicraft and food & agro products. So far, it was done through the direct selling segment on Alibaba’s various portals.

A top executive at Alibaba’s global business development had told Business Standard recently that through this initiative, the Chinese e-commerce giant would work directly with Indian exporters and manufacturers, akin to its operations in its home market.

Alibaba founder Jack Ma met Prime Minister Narendra Modi several times in the past two years to talk about initiatives on SMEs.