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Alibaba goes for the jugular as Indian e-commerce flounders

  • Last week, media reports alleged that Alibaba had poached Priya Cherian, Flipkart's human resources director
  • Then there was intense speculation that it will be acquiring Gurgaon-based e-commerce firm ShopClues
Alibaba goes for the jugular as Indian ecommerce flounders

 

Alibaba goes for the jugular as Indian ecommerce flounders Jack Ma, the legendary founder of Alibaba, is not wasting any time and is going for the jugular in the Indian e-commerce space.

 

China's richest man, Jack Ma has a personal fortune of about $24.4 billion. He founded Alibaba in 1999. Valued at a mind-boggling $240 billion, according to experts, Alibaba, became the world's largest online and mobile commerce company by GMV (gross merchandise value) in 2013.  

 

During his last visit here, Ma had said Alibaba was keen to invest more funds in India and will work with Indian technology entrepreneurs as he believes the Internet can transform the country's future.

 

The Hangzhou-based firm will "invest more in India, work with Indian entrepreneurs and technology companies," he had said at that time.

 

On its site currently, it already has a large number of small Indian businesses selling goods ranging from spices to chocolates to tea.

 

In September 2014, Alibaba raised $25 billion in a record initial public offer. So clearly Alibaba has very deep pockets and is not afraid of spending. 

 

Last week, media reports alleged that Alibaba had poached Priya Cherian, Flipkart's human resources director to head its talent acquisition and HR department as the Chinese e-commerce giant gears up to launch its India operations. 

 

Cherian was earlier the HR director at Yahoo for almost seven years prior to joining Flipkart last April and will be working with K Guru Gowrappan, who has been hired by Alibaba to lead its India foray. Bharati Balakrishnan, former chief business officer at local services marketplace LocalOye, was the first senior-level hire made by Alibaba for its local team in India.

 

Alibaba goes for the jugular as Indian ecommerce flounders Earlier in August, a Times of India report said that Alibaba's India's operations are likely to be headquartered in Bengaluru and that the company is scouting for 20,000 sq ft of space to build its corporate office. 

 

The report also said that the company would launch operations by the end of the current calendar or early next year.  

 

The initial office space requirement is for 150-200 people, with options to take up more later. 

 

Then there was intense speculation that it will be acquiring Gurgaon-based e-commerce firm ShopClues that is valued at $1 billion. ShopClues is a subsidised online market that sells cheaper and unbranded products to its online shoppers. Reports said that given that Alibaba already has a stake in Paytm, it could look at merging it with ShopClues. 

 

Gowrappan, former Zynga and Yahoo executive, is believed to be personally in talks with ShopClues. GIC of Singapore, Tiger Global, Nexus Venture Partners and Helion are the investors of ShopClues, which has raised $250 million till date.  

 

Alibaba has competition for its ShopClues hopes too. With its revenue run-rate of $750 million (based on the value of the goods sold), there are plenty of investors lining up for a piece of the pie, including Flipkart - which shares a common investor with ShopClues, Tiger Global. 

 

Alibaba's timing could not be more perfect, given the utter chaos gripping the operations of its local competitors - Flipkart and Snapdeal. Both are streamlining their businesses, and consequently indulging in massive retrenchment. In their bid to finally post profits, they are disposing of assets and reducing their employee strength.  

 

Flipkart, India's largest e-commerce marketplace, recently offered employees who failed to meet professional expectations the choice to either resign or be sent off with a severance pay. The decision is expected to impact 700 to 1,000 staff.

 

All of this is a direct outcome of Flipkart burning an estimated $50 million a month and clocking up more than ₹2000 crore in losses. The company is now focussed on becoming profitable.
 

According to a report in The Financial Express, Snapdeal saw its losses widening five times to ₹1,319.29 crore for the year ended March 31, 2015, from ₹264.62 crore in FY14, according to the company’s filing with the registrar of companies. 

 

Not surprisingly then the Gurgaon-based company reportedly is wanting to cut costs, and therefore cracking the whip on employees whose performance is not on par. 

 

Asianet Newsable's attempts to reach Alibaba's India office in Dadar, Mumbai were unsuccessful.
 

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