Reliance Retail and Alibaba are negotiating a partnership in the Indian retail segment. According to reports, the firms are pushing to build “a mega Indian retail joint venture” with an investment of “at least $5 billion” to mount a challenge against existing players, including Flipkart, and Amazon India.
Alibaba is reportedly looking to acquire a large portion of Reliance Retail in order to build and expand a digital commerce venture.
The news isn’t unexpected, according to market watchers, as the fast-growing digital commerce market in India has attracted attention from global players. With Walmart’s push to purchase Flipkart earlier this year and Amazon India’s multiple billion dollar infrastructure investments, most considered it only a matter of time before Alibaba moved to up its game against the other mega-players dividing up the terrain.
The executive chairman of Alibaba, Jack Ma met with Mukesh Ambani, the chairman of Reliance Industries at the end of July to discuss the proposal.
Reportedly, the deal will create “a large omnichannel retail entity,” and Goldman Sachs is advising the companies on the proposal.
To date, Reliance, Alibaba and Goldman Sachs have not issued any official word on their plans, nor have they confirmed Alibaba’s largest investment in an Indian company thus far.
Alibaba already operates both Tmall and Taobao, two of the world’s most popular retail marketplaces. Both are mostly shopped by Chinese consumers, but its global volume of sales outside China have been on the incline in recent years. Both marketplaces hit $478.6 billion in total transaction volume in 2016 and is expected to cross $900 billion by 2020.
Alibaba has also committed to investing 100 billion yuan to form a global logistics network.
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