Two very interesting and exciting developments have taken place in the retail sector of India, which promises to shift the dynamics of the industry forever.
Alibaba, the Chinese ecommerce giant is all set to invest in Reliance Retail, and acquire some stake to make a sizzling entry into the market.
Whereas Amazon is all set to acquire anything between 30-51% of More, a retail brand from Aditya Birla Group.
This means, that the ecommerce battle in India is taking new, never-seen-before twists and turns: It can be Alibaba + Reliance pitched against Amazon + Birla and Walmart + Flipkart.
Which direction is the Indian ecommerce and retail sector going now?
Alibaba Wants A Pie Of Reliance Retail?
As per reports coming in, Alibaba wants to invest $5 billion in Reliance Retail, and acquire a large stake to create India’s biggest retail behemoth.
As per insider reports, Jack Ma, founder of Alibaba has already met Reliance Chairman Mukesh Ambani, and proposed an offer.
An unnamed official said, “Alibaba is willing to pick up a significant stake in Reliance Retail, preferably 50%, which will require Alibaba to invest $5-6 billion.”
This becomes interesting after RBI stopped Paytm Payments Bank to acquire new customers, as there are some apprehensions regarding the company’s internal structure and Alibaba’s significance in that.
Alibaba’s massive investment in Paytm was just the start, it seems.
In case Alibaba and Reliance join forces, then it would be unstoppable: Both in online and offline space.
Both Alibaba and Reliance has refused to comment on this development.
Amazon To Acquire More?
Meanwhile, another major news is breaking out: Amazon is all set to acquire Aditya Birla Group’s More brand of retail stores.
Amazon and Samara Capital, both are willing to spend Rs 4,200-4,400 crore to acquire 42-49% stake in More retail stores.
Amazon has already set aside a budget of $500 million for expanding their food retail business in India, and this acquisition can be a major stepping stone.
Now, the figure of 42-49% is also very interesting, because as per existing FDI rules, a foreign entity can acquire upto 51% in a multi-chain retail business.
Hence, on one hand, Amazon wants to play it safe, on the other hand, they need some action.
In case Amazon acquires More brand, then it will be a major force in dictating the retail rules of India. Amazon is the ecommerce behemoth, and with 590 supermarkets and 23 hypermarkets around the country, More is a name to reckon with in the retail sector, which gives Reliance Retail is a tough fight.
Now, all eyes are set on Flipkart and Walmart, and it would be interesting to observe how they react.
We will keep you updated, as we receive more news!
******* Update *******
We have received clarifications regarding the alleged news of Alibaba investing in Reliance Retail:
1) “Alibaba is looking to acquire up to 50% stake in Reliance Retail for at least $5 billion”.
Clarification from Reliance: There have been no discussions with Alibaba or with anyone else on acquiring a stake in Reliance Retail Limited.
2) “Alibaba’s executive chairman, Jack Ma, met Reliance Industries chairman Mukesh Ambani in July-end to discuss the proposal”.
Clarification from Reliance: There was NO meeting between our Chairman and Mr. Jack Ma in Mumbai in July-end as indicated in the story.
3) “Reliance Retail is planning a similar model like PayTM”
Clarification from Reliance: Reliance Retail is the LARGEST, FASTEST GROWING AND MOST PROFITABLE retail company in India. The strategic and growth plans of Reliance Retail has been shared by our Chairman in his AGM address to the shareholders. There is no update since then.