With This Deal, Alibaba’s Total Investment In India Will Reach Over $1.7 Bn
After investing in two hottest verticals – payments (Paytm) and grocery (BigBasket), Alibaba is now moving towards the backbone of Indian commerce – the logistics in the year 2018. As per reports, Alibaba is taking final steps to invest up to $100 Mn in XpressBees, a Pune-based logistics firm.
“The deal is likely to close in the next two-three weeks,” as stated by an ETtech source.
Earlier, in June 2016, Inc42 reported that Alibaba is looking to invest in Delhivery and XpressBees. The idea was to first establish the Paytm’s spun off ecommerce entity Paytm Mall and then build an Amazon-like logistics network to complete its ‘iron triangle’ in the country.
Founded in 2015 by Amitava Saha and Supam Maheshwari, XpressBees is an ecommerce logistics company, spun out of baby products retailer FirstCry, which made headlines in October 2016 after acquiring its rival BabyOye. Owned by Busybees Logistics Solutions, Xpressbees aims to fulfill comprehensive supply-demand needs of India’s online industry through best in class solutions and domain expertise.
It caters to the services such as last-mile delivery, reverse logistics, payment collection, drop shipping, vendor management, cross-border services, fulfillment services and tailored software solutions. As mentioned on its website, the team deliver 60,000+ shipments every day, and this number is scaling exponentially. It already works with Paytm as third-party logistics and eKYC partner and also raised $12.5 Mn Series A investment from existing investors SAIF Partners, IDG Ventures, Vertex Ventures and Valiant Capital in February 2016.
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“Alibaba wants to make Xpress-Bees the Cainiao of India, and over time logistics operations for all companies like Paytm Mall and Bigbasket may get consolidated under it giving it a larger captive customer base,” said another ETtech source.
Based in China, Cainiao was founded by Alibaba Group in May 2013 with a consortium of logistics companies. Alibaba recently increased its stake in the $20 Bn worth company to become a majority shareholder and have also announced that time to invest $15 Bn in order to develop its global logistics network in the next five years.
As stated by Alibaba Group Holding CEO Daniel Zhang in a media statement recently, India holds immense potential and is a “very important” target for the ecommerce behemoth in its global strategy. And this is clearly visible in the manner Alibaba has made its investments in the Indian startup ecosystem so far. Starting from Paytm ($1 Bn), the Chinese conglomerate has placed its bid into ventures such as Paytm Mall ($175 Mn), Snapdeal ($150 Mn), BigBasket ($300 Mn)and TicketNew ($30 Mn). If the XpressBees deal goes through, then the total investment of Alibaba in India will reach over $1.75 Bn.
The Indian logistics sector is currently valued at $140 Bn. Not only the biggies like Ecom Express, or Delhivery but also there has now emerged a breed of young startups catering to a magnitude of niche areas in this sector and are in the list of potential unicorns. Further, according to a report by investment bank Avendus Capital, the logistics tech market is expected to surge to $9.6 Bn by 2020.
Alibaba is entering the Indian logistics segment at a time when players like Flipkart and Amazon are already busy strengthening their in-house logistics and warehouse mechanisms. Also, with Flipkart entering into hyperlocal segment and Amazon into food retail as well as grocery delivery, it now becomes crucial for Alibaba to up its logistics strategy in order to excel in the Indian ecommerce game. On the other hand, if Alibaba is able to strengthen its ‘iron pillar’ in India binded by players like BigBasket, Paytm and XpressBees on three sides, it is expected to see further consolidations in the ecosystem, thereby hinting towards the direction where the power is heading to in near future.