Alibaba may buy 50% stake in Reliance Retail to take on Flipkart, Amazon
At Reliance Industries’ 41st AGM, Mukesh Ambani said that RIL sees its biggest growth opportunity in creating a hybrid, online-to-offline new commerce platform. More than a month after the annual shareholders’ meeting, India’s richest man may have finally found a new partner who has tremendous expertise in running an e-commerce business in neighbouring China. With an an investment of $5 billion the JV aspires to take on India’s largest e-retail giant Flipkart and Jeff Bezos-owned Amazon.
At the shareholders’ meeting, Mukesh Ambani gave a peek into his long-term plans to grab a bigger piece of country’s fast-growing e-commerce sector which is estimated to grow at a 21 per cent CAGR over the next 10 years to $202 billion. The oil-to-telecom conglomerate wants to synergise the widespread presence of Reliance Retail’s physical stores with the strengths of Jio’s digital infrastructure.
According to a report, Alibaba Group’s executive chairman, Jack Ma, met RIL chairman Mukesh Ambani in July-end in Mumbai to discuss the proposal. The two reportedly discussed a number of issues, including a plan to create a large omni channel retail entity through the proposed joint venture.
“The deal is crucial for Alibaba, especially after RBI (Reserve Bank of India) directed Paytm (in which Alibaba holds 49%) to stop on-boarding new customers because of the shareholding pattern of Paytm,” the report further said.
Reliance Retail, with its 7,500 stores in 4,400 cities attracting more than 350 million footfalls, is among the country’s largest and fastest-growing retail companies in the country. Its revenues crossed Rs 69,000 crore in FY18, posting a growth of over 100 per cent year-on-year. Its fashion retail arm Reliance Trends and consumer electronics brand Reliance Digital are the largest in their respective categories.
Reliance Retail had recently launched its Reconnect brand of consumer appliances and electrical goods. It also operates the largest portfolio of 41 international brands like Gas, Steve Madden, DIESEL, etc. A single e-commerce platform for all these verticals makes sense, especially at a time when the India e-commerce market is reportedly pegged to grow to $202 billion over the next 10 years.
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