Alibaba seems to be stepping up its investment game in India with its decision to invest up to $100 million in Indian logistics startup, Xpress Bees. This is being seen as something significant, since Alibaba appears to be working to a plan to choose specific verticals in India. Looking at its past choices of Paytm and Big Basket, the payments and grocery segments, now entering the logistics sector maybe part of that larger plan.
It is not as if the decision to invest in Xpress Bees happened suddenly. It has been on the works for a long period. Paytm Mall has been trying to expand its product portfolio and spread and logistics has to be one of the key elements in the online retailing space. Amazon and Flipkart, the top 2 e-tailers in India have already taken several steps to strengthen their delivery and logistics.
Amitava Saha and Supam Maheshwari are the founders of the startup and the original venture was First Cry, a baby products retailer. First Cry took over a rival baby products startup BabyOye and created a stir. XpressBees has fashioned itself as an end-to-end solutions provider in the logistics space by making deliveries, reverse logistics, payment collection, drop shipping, vendor management, cross-border services, fulfillment services and software solutions, as needed by their customers. They are already handling 60,000 shipments a day and this number is growing quite fast. XpressBees has raised series A funding from investors, SAIF Partners, IDG Ventures, Vertex Ventures and Valiant Capital to the extent of $12.5 million about a couple of years back.
Observers are ready to bet that Alibaba may have long term plans to consolidate the logistics support services for both Paytm Mall and Big Basket and gain better control of the operations. Alibaba already has a similar model it has nurtured in China, called Cainiao. Its investment in XpressBees may be seen as an attempt to create the Indian version of Cainiao.
That Alibaba is eyeing the Indian market as having a huge potential for the future, is definitely acknowledged by the company itself. With the inclusion of this $100 million investment going through, Alibaba’s exposure to the Indian market will touch $1.7 billion. It has already invested in Paytm ($1 billion), Paytm Mall ($175 million), Snapdeal ($150 millon), BigBasket ($300 million) and TicketNew ($30 million).
There are reports and studies to indicate that the logistics market in India is poised for a quantum leap and the next couple of years are expected to be very bright for the vertical. Alibaba is aware of this trend and that is perhaps why it has chosen XpressBees to make this investment.