E-commerce in India: Alibaba Rakuten eyes foray

By: and | Updated: June 29, 2016 8:45 AM

The e-retailer, which recorded a global transaction volume of about $1.1 trn in 2015, may reach India by Sept

alibabaThe e-retailer, which recorded a global transaction volume of about .1 trn in 2015, may reach India by Sept (Reuters)

The Alibaba of Japan, Rakuten is tipped to kick off e-commerce operations in India in the next two months. Sources said the Japanese e-retailer, which recorded a global transaction volume of about ¥7.5 trillion ($1.1 trillion) in 2015, may open up its platform as early as August or September.

The e-commerce giant, which earns an estimated 40% of its revenues in Japan, will probably work with two business models — the conventional B2C e-commerce and a cashback set-up. In response to an e-mail query from FE, a spokesperson for Rakuten said, “India is a vibrant growth market and a great source of top talent and ideas for us at Rakuten. We will continue to expand our development activities in India through the recruitment of great engineering talent and although we are always interested in new global opportunities for growth, we don’t have any updates on new business developments in India at this time.”

Sources said Rakuten has been engaging with key vendors in India for the past several months and is even looking at investing in a few small sized e-commerce companies in India.

The Japanese e-tailer plans to set up an online cashback business similar to what its group company Ebates is doing in US. Rakuten had acquired Ebates for $1 billion in September, 2014 which reported gross merchandise sales of $4.9 billion in 2015.

In 2014, the Japanese e-tailer had opened Rakuten India Development and Operations Center (RIDOC) in Bengaluru. The company also appointed Sachin Dalal, co-founder of e-commerce website Infibeam, as its India head.

According to RBI data, in April, Rakuten India Enterprise raised $4.1 million as external commercial borrowings for general corporate purposes (which includes working capital). This has been registered as an unlisted private company with a paid-up capital of R13.72 crore.

Established in 1997 as a small online marketplace in Japan, Rakuten today has operations across several markets including the US, UK, Germany, Brazil, Spain, Malaysia, Taiwan and Indonesia. Rakuten has over 40,000 shop listings on its platform.

Rakuten has been very active on the inorganic front of late. It had acquired Buy.com in the US in 2010 for $250-million in an all-cash deal while it bought social media internet messaging and calling service Viber in 2014 for $900 million.

The Indian e-commerce market is expected to cross $100 billion by 2020 from the level of $16 billion in 2015, according to a report by Deloitte. “A 6x growth over 5 years is envisaged for e-commerce driven by factors like new-age technology, convenience, higher adoption rates and larger reach,” the report said.

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