Alibaba in joint venture talks with RIL, Tata and Future Retail

Tinuku - Alibaba eyes joint venture with big Indian companies in talks with RIL, Tata and Future Retail. The talks with influential Indian conglomerates to boost its omni-channel or multi-channel retailing plans in the world’s sixth largest economy.

Alibaba’s senior executives have held discussions with the Mukesh Ambani-led Reliance Industries (RIL), Tata Group and Kishore Biyani’s Future Retail in recent months in a bid to accelerate their India push. While discussions with RIL is new, it had held talks with Noel Tata, chairman of Trent, and Cyrus Mistry, the former chairman of Tata Group.

Tinuku Alibaba in joint venture talks with RIL, Tata and Future Retail

RIL, Tata and Future have significant retailing footprint, something which could bolster Alibaba’s omni-channel blueprint in the country. Multi-channel retailing provides shoppers with a consistent and seamless buying experience across online and offline stores. Alibaba has popularised this approach as ‘online-to-offline’ (O2O) model in China, especially to on-board offline users who might not be making purchases through online platforms.

The talks revolved around a possible joint venture or a broader synergistic alliance with Alibaba picking up a stake in the retail entities of any of the large Indian groups. A few days ago, Biyani said that he could close a deal with a foreign investor in the next couple of months, however, didn’t reveal the name of the potential alliance partner.

It’s reported that Alibaba’s American rival Amazon has held talks with Biyani to acquire a stake in Future Retail. RIL and Tata didn’t respond to queries from this newspaper, while an emailed questionnaire to Alibaba remained unanswered at the time of going to press. Biyani said he hasn’t had any discussions with Alibaba.

Alibaba has drawn up a list of possible partners that goes beyond the three earlier-mentioned conglomerates, while adding that a partner could be identified in the “next few months”. There is speculation that Alibaba, along with Goldman Sachs, could be part of a consortium that Samara Capital is putting together to acquire More supermarkets from the Aditya Birla Group.

Alibaba is hastening plans in India following Walmart’s $16 billion acquisition of Flipkart and Amazon’s rapid strides backed by $5 billion investments. The company, which clocked profits of $10 billion on revenues of nearly $40 billion in fiscal 2017-18, holds significant stake in Paytm Mall, which has made sedate progress in a fiercely competitive market.

Despite the backing of Alibaba and SoftBank, Paytm Mall clocks about one lakh daily shipments, which is much less than Amazon and Flipkart that are doing about four lakh daily shipments. Alibaba has pushed the Noida-based company to approach the market with an O2O model, unlike other existing players who largely rely on a mix of inventory and marketplace model in India.

Besides Paytm Mall, Alibaba holds stakes in BigBasket, Zomato and TicketNew. It plans to bring these investments into the proposed new partnership to tap synergies, the people added. RIL runs Reliance Retail, which in turn has a plethora of businesses and is working on its own omni-channel strategy in tandem with Reliance Jio. While Alibaba is impressed by RIL’s ambitious plans, it is unclear if India’s most-valued company would want to induct a foreign partner right now.

Ambani had said that the biggest growth opportunity for RIL’s consumer-facing business is in creating a “hybrid, online-to-offline commerce platform”. The retail unit has 7,500 physical stores in India across categories ranging from clothing to grocery to electronics.

Like RIL, it is unclear whether Tata is ready to bring in an overseas partner in its retail business. Tata Group chairman N Chandrasekaran is focused on scaling up and integrating the physical and digital retail platforms. The conglomerate’s retail is spread across Titan, Trent (Star Bazaar), Infiniti Retail (Croma) and Tata Unistore (CLiQ), among other companies.

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