Alibaba all set to open its first office in Mumbai soon

Alibaba, one of the largest e-commerce entity in China, is setting up its first India office in Mumbai, apparently an indication that it would step up investment in the country in the coming year, to capture a pie of the growing e-commerce market.

So far, the Jack Ma-founded enterprise has been a preferred platform for small businesses in India to source industrial goods from China.

And, for vendors selling their products to customers globally, Alibaba has invested in Indian e-commerce company Snapdeal, and in Paytm, the mobile payments service platform, through Ant Financials, its payment arm.

It has, though, kept its plan to enter e-commerce in India under wraps. By setting up a office at Platina in the Bandra-Kurla Complex (BKC) in Mumbai, closer to that of US rival Amazon, it appears to now be signaling the intent that it is serious on entering.

Devangshu Dutta, Chief Executives, Third Eyesight, a consultancy for e-commerce firms, said, "Given the kind of merchant network they have, India is definitely a potential market for them."

“There needs to be significant investment from Alibaba because Amazon is on a high and though Flipkart and Snapdeal are on a low, they’ve invested significant money in the delivery network.”

A mail to Alibaba did not elicit a response. Girish Shah, a director at The Wadhwa Group which owns the Platina building, confirmed the development.

“With Kotak Mahindra Bank, IDFC Bank and Aditya Birla Finance as Alibaba.com’s new partners in India, it was expected that they'd need an office in Mumbai sooner than later. Among other things, these partners will provide banking, transactional services and lending to Alibaba.com’s members. We expect the battle for market share to get fiercer between these firms,” said Raja Seetharaman, director at commercial property analytics firm Propstack.

India's $17-20 billion e-commerce market, expected to grow to $34 bn next year, is dominated by local giant Flipkart, followed by Amazon, which has committed at least $5 bn to bridge the gap. Snapdeal is a distant third.

Analysts say Alibaba might not get a walkover in India's e-commerce market, due to entrenched competition from Amazon and its Indian rivals. "It depends a lot on what strategy they adopt, what money they’re willing to pour in. India is a very different market from China," says Dutta.