Alibaba eyes investment in Reliance, Tata, Future Group to ramp up its O2O play in India

After focusing on Indian tech startups, Chinese Internet conglomerate Alibaba has shifted towards decades old corporates and is planning to invest in companies like Reliance Group, Tata Group and Future Retail.

Since Alibaba has created a formidable omni channel (aka O2O) business in China through its ecosystem consisting of payments, supply chain, and offline retail, Jack Ma wants to repeat the same playbook in India.

Moreover, in past two years, a major chunk of online retailers in India have realised that scale in India can't be built without strong offline support. Right from Amazon, Myntra, Voonik to Urbanladder, Pepperfry including many others are leveraging offline outlets as experiences centres as well as sales channel.

The Alibaba's interest in aforementioned corporates comes at a time when Kishore Biyani revealed that Future Group is likely to close an investment deal with a foreign investor within a couple of months. Biyani didn't disclose the name of the investor.

Although, Biyani was reportedly in talks with Amazon for selling 10 per cent stake for about $600 million in May this year. Since then, no further details have emerged on speculated deal.

Over the past several years, Alibaba has adopted an ‘online-to-offline’ model in China to support the unorganised and small to medium retail business. The company's biggest investee Paytm has also started replicating the same model in India.

With picking 10 per cent stake in Shopper Stop for about 180 crore last year, Amazon already had begun investment in India’s $60 billion organized retail market. Paytm Mall recently expressed interst in launching a physical store.

According to the report, Alibaba is also planning to hold talks with other companies beyond Future Group, Reliance and Tata.

Meanwhile, interest of large oversea Internet groups in indigenous offline retailers is obvious as crucial factors such as demand, consumer behaviour, and consumption pattern differ on every 100 km in India.

Key infrastructures like supply chain is inefficient and broken in tier 2 and 3 cities. Amazon, Alibaba and Walmart believe that strategic investment in top offline retailer who have presence in many cities (large and small) can help them solving supply chain bottlenecks and gain actionable intelligence.

The development was first reported by TOI.