To embrace Alibaba, be more like it

Domestic firms changing biz models to woo China's e-major

It is not only ‘Made in China’ products that e-commerce companies such as Paytm and Snapdeal sell on their platforms. Their business model is also being imported from that country.

Wanting to woo Chinese online major Alibaba for a technical and financial collaboration when it directly enters India, home-grown players are changing their business model. For instance, both Paytm and Snapdeal are following Alibaba’s business template, called ‘iron triangle’. The format refers to Alibaba’s watertight business model, of e-commerce, logistics and payments.

While Paytm has said it is open to having its marketplace vertical merged or acquired, Snapdeal has made it clear that it would be open to a collaboration with Alibaba. According to sector insiders, with US giant Amazon marching ahead with big-ticket investments here, Indian competitors are looking for a possible alliance with Alibaba to help them combat it.

Paytm, this country's largest in mobile wallets and in which Alibaba Group is the largest shareholder, with investments amounting to $680 million, has been following the iron triangle for some time. The Vijay Shekhar Sharma-led company gets technology and knowledge transfer from Alibaba, beside funding.

In a recent interview Sharma had said Amazon and Alibaba would be the top e-commerce players in India in a year. He had also said the company would hive off its e-commerce platform into a separate company and then try to raise funds or be merged or acquired.  

Sources said the company hopes to be the one that is merged with Alibaba. The Chinese company is keeping its options open, looking at others, too.  Snapdeal, trying to tweak its business to hit upon the right model, has also reshaped to incorporate the iron triangle.

It recently acquired online mobile wallet player Freecharge and has a stake in logistics company GoJavas. Recently, its chief executive, Kunal Bahl said the company was open to collaboration with Alibaba.

ALIBABA’S INDIA MODEL

• Alibaba Group and subsidiary Ant Financial are the largest shareholders of One97 Communications
   
• Total investment pegged at $680 million
   
• Paytm had struck a deal in February to raise $575 million from Ant Financial
   
• In August, Snapdeal raised $500 million in a round led by Alibaba, Foxconn and SoftBank