Founded in 1999 by Chinese entrepreneur Jack Ma, Alibaba Group Holding Ltd, which owns Alibaba.com among other websites, has grown to be one of the world’s largest e-commerce companies on the basis of the value of transactions across its online platforms. There is widespread media buzz that the company is looking to list its shares in the US and some analysts estimate that it may be worth at least $100 billion.
In India, Alibaba offers its marketplace platform only for businesses and has stayed away from selling to the wider public. Alibaba’s India head Khalid Isar said in an interview over the phone that the company had doubled its user base in the country since launching in 2010. But at a time when global e-commerce giants such as Amazon and eBay are increasing their presence in India, Alibaba will continue to maintain a low profile and is not looking to launch a consumer-facing website any time soon, Isar said. Edited excerpts:
Alibaba has kept a low profile in India since starting operations in November 2010. Can you give a brief overview of the size and scale of your business here?
What we do and want to do is help SMEs (small and medium enterprises) do business globally. We are a purely business-to-business platform in India and we facilitate buyers and suppliers to interact with each other and make business easier for them. We had around 3.1 million users registered in India (as of June 2012) and it’s clear that after China, India is a manufacturing hub, so we have a lot of confidence that the e-commerce opportunity is huge.
Alibaba has over 37 million registered users worldwide and suppliers have access to users from over 240 countries and regions. Since 2010 we’ve seen a growth of 34% in our user base. Anyone can sign on as a user. Obviously, we look for more of our customers to get verified because it’s going to make it easier for them to build credibility on the Internet.
What is your product mix here and which are your most popular products?
The most popular products among buyers are machinery, agricultural products and apparel. Apart from these, another important category from India is jewellery. Overall we have 5,500 categories and sub-categories on the platform, so currently we don’t see any other category that is important and that we’re missing.
What your expansion plans in India?
We’re focused on two approaches. One is to help spread awareness among SMEs about how business happens on the Internet and second is to make sure that they make the most out of that by using our platform regularly. Over the past two years, we’ve seen a surge in the number of users who do business over the Net. So we want to go beyond the metros and go into tier 2 and tier 3 cities and make business happen for SMEs. The confidence that businesses in other countries have about doing business over the Net—that’s what we want to build in India.
What is your business model in India—what are your revenue sources?
Our prime focus is not to monetize from the India market as of now. We want to establish India as one of the leading supplying nations throughout the globe on the Internet so generating revenues is not a prime focus— though we have premium membership options which suppliers can purchase from. So our only source of revenue is membership fee.
E-commerce giants such as Amazon and eBay are increasing their presence in India as they are lured by the potential of millions of people buying online. Why have you chosen to do business in India through the B-to-B (business-to-business) route?
We believe in a certain value-driven approach of doing it less but doing it well. Despite the fact that we don’t do retail in India, we are looking forward to the Indian market establishing itself on the Internet, that people start believing that e-commerce is the way forward, and then probably when there are huge opportunities in the future...
Still, Internet users are increasing, smartphone usage is growing—why not build your brand among consumers?
So far China has been one of the biggest manufacturing nations. Slowly and steadily, because of some reasons, our buyers across the globe started looking for another place as well. And India was that place. The time we entered India, we wanted to understand the Indian market, we wanted to go slow but go well. We are still in the process of establishing B-to-B, and we’re happy with the response from our Indian users so far. It shows in the fact that 3.1 million users are almost 10% of Alibaba’s global user-base. India has benefits such as having a large manufacturing base, wide English usage and it’s one of the markets with the most potential to satisfy the needs of foreign buyers.
So you don’t have any immediate plans to launch a consumer-facing platform?
As of now, we definitely have no plans.