Alibaba Group Holding Limited (BABA, Financial) and Facebook Inc. (FB, Financial) are teaming up in one of the fastest-growing economies, India, to cater to the third-largest smartphone market in the world. The tie up looks to tap into the 41% market share that Alibaba-owned UCWeb enjoys, in the mobile browser forum, wherein push notifications will be enabled without an add-on download. Facebook not only has a large user base but also multiple offices which it is looking at expanding. Alibabaâs UCWeb has surprised many with its user friendly interface and a sole office in Mumbai may see rapid expansion in the near future. The move comes as both the technology driven entities look to penetrate a country that seems ripe for picking from an investment view point. This information hasnât garnered much traction in the market but these are calculated moves from the two giants. Letâs take a closer look.
Whatâs in it for Alibaba?
An escalating number of consumers on the digital front, means India is always going to be an attraction for business. With demographics very similar to China, it is no surprise Alibaba is looking to explore avenues in a country that may well be home away from home. Around 80% of the online orders in China were shipped by Alibaba.
Many believe that the market in China maybe saturated and hence India may be the next âgo toâ market considering the e-commerce industry could touch levels of up to $100 billion. With Flipkart, Amazon (AMZN, Financial) and Snapdeal already in a slug fest for top honours; Alibaba is looking to invest around $550 million in One97 Communications. One97 owns Paytm, an online payment platform with more than 20 million registered users, a platform that Alipay would look to grow with. Increase in the amount of disposable income and low credit card penetration means the Indian market is conducive for online payment methods such as Paytm. While Jack Ma is not the quickest to divulge, his entry into India seems inevitable and after rumoured deals with Snapdeal fell through, Paytm could be a gateway to many more opportunities.
Whatâs in it for Facebook?
Mark Zuckerbergâs maiden trip to India in October, 2014, came at a time when a new government was inducted and the markets were riding on the âModi waveâ. The Harvard dropout spoke of reaching out to the rural areas of the country to improve connectivity through technology, in other words, drive upward a 100 million user-base that Facebook currently has through India, second to USA. The digitization of India is driving growth centric companies like Facebook to monetize a market that is almost virgin.
Failed Xiaomi and Baidu (BIDU, Financial) link-ups mean a lot may ride on ties with UCWeb; for Zuckerberg seems hell bent on entering a flourishing Chinese market. Remember, the Menlo Park headquartered company was banned in China, effectively from July 2008. Facebook wants to add roughly 1200 to its 8,348 employee base (as on September, 2014) only fuelling its aggressive expansion plans. As Sheryl Sandberg, chief operating officer, aptly put it in an interview with Reuters (TRI, Financial), âWe are an ambitious company run by an ambitious CEO.â
Final thoughts
Indiaâs growth opens a wide array of possibilities none more so than for Facebook and Alibaba only because the shift is most apparent to a digital India. A country of over a billion only has 292 million online constituting about 19% of its population. With such a huge consumer base waiting to be tapped, signs are ominous that the tie-up between the two is only the start to a much more penetrative growth plan. The marriage of e-commerce and social networking looks set to become a larger behemoth than what we see them to be individually.
