Alibaba to invest $1 bn to help its India-based cross-border business soar

Sunny Sen February 28, 2018 4 min

Chinese ecommerce giant Alibaba will invest $1 billion, or over Rs 6,500 crore, over four-five years in the India operations of its little known cross-border wholesale trade business, according to two sources with knowledge of the plan.

The investments by the Jack Ma-helmed company will be concentrated in three areas — merchant acquisitions, technology and logistics.

The cross-border wholesale business was one of the first businesses of Alibaba in India and it has already invested over $200 million dollars in the business that the company refers to as its b2b business.

It is not clear yet whether this $1 billion investment is part of the $8 billion Alibaba has earmarked for India by 2022.

Alibaba has not responded to FactorDaily’s queries sent on Tuesday. The story will be updated when it responds.

The Chinese behemoth has pumped in close to $2 billion, or some Rs 13,000 crore at today’s currency rates, into half a dozen Indian companies but that is still small change for a company whose free cash flow this fiscal year alone is projected by analysts to be over CNY 89 billion (nearly Rs 91,400 crore).

“Alibaba is quietly building the b2b business… most of the people don’t talk about it but for Alibaba, the wholesale business is as or more important than building the business-to-consumer (b2c) business in India,” said one of the sources, asking not to be identified because he is not authorised to speak with the media.

While Alibaba’s biggest rival Amazon has been focussing on the India market to building its b2c business and a b2b business (housed under, the Chinese firm is looking to connect Indian sellers with retail buyers in different countries. “That is a unique opportunity few have tapped in India… it has largely been an unorganised export business filled with middlemen and touts… Merchants lose a lot of money,” said the first source.

India clocked total exports of some $275 billion in fiscal year 2016-17. Less than 1% of that is estimated to have been concluded online. Trade body Federation of Indian Export Organisations estimates $5 billion exports can be concluded online in a two-three year timeframe.

Unlike the roaring b2c business led by Flipkart, Amazon, and Paytm, ecommerce exports have been lacklustre and have interested only a few. Most standalone b2b ecommerce firms such as Power2SME, Moglix, Tolexo and Ofbusiness are India-focussed aiming to bridge the gap between wholesalers and retailers or bulk buyers.

“We are just scratching the surface in building global sellers out of India… it can become a half a trillion dollar opportunity in consumer ecommerce,” said Rohit Kulkarni, country head of Payoneer, a financial services company that helps clients build a global footprint. “You have unique products in India that are not available elsewhere.”

Alibaba is not the only one in the global seller race. Amazon, eBay (whose India operations are being folded into Flipkart) and Flipkart are eyeing that market, too. Amazon has already roped in Dabur, Titan, Amul, FabIndia, Biba, Liberty Shoes, Hindware among hundreds of such other brands to build its overseas business out of India. It already has 26,000 sellers and more than 70 million products.

“Companies like Titan don’t even have their offline presence in the US… This makes their distribution channel in the US and they can easily reach hundreds of thousands of customers without having an office,” Gopal Pillai, ‎head of seller services at Amazon India, told FactorDaily November last year.

Ashish Kapoor, chief analyst at Kalagota, a market intelligence platform, pointed out last year how Alibaba’s b2b business in India was pulling ahead of rivals IndiaMart, TradeIndia, Wydr and others in terms of app downloads. Others like CDiscount, Lazarda, Linio, and Tophatter have also tried to build an overseas business.

Alibaba, meanwhile, has built the largest ecosystem of merchants. It already has close to four million merchants, who both sell and buy on the platform, and it wants to double that number in the next three-four years, said the second source. The largest selling categories are apparel, handicrafts, ethnic wear and leather products.

Logistics is an important part of Alibaba’s game plan. In China, it has a controlling stake in logistics company Cainiao and is planning to invest $15 billion to build global logistics capabilities. In India, Alibaba recently invested Rs 224 crore in Xpressbees. “Xpressbees will work closely with Cainiao to solve the logistics problems for the global sellers,” said a third source in the company.

While Xpressbees will handle the local logistics – from the seller to the local warehouse or a distribution centre and till the port or the airport, Cainiao will handle the global logistics. It has also partnered with DHL and Delhivery to provide international and local logistics.

Alibaba has also partnered with financial services companies such as Aditya Birla Group’s NBFC arm and Kotak Mahindra Bank to help merchants with finances and loans. Alibaba plans to use the trading data as a means to secure loans for the merchants.


Updated at 03:25 pm on February 28, 2018  to add the Indian rupee conversion in the sixth paragraph.

Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.