Chinese e-commerce giant Alibaba is formally entering the Indian e-commerce space by investing in Paytm. It has made an initial capital investment of Rs1, 700 Crore to get a majority stake in the company.
With this, Alibaba will own 50% of shares in the company. The recent reports by Economic times suggest that Alibaba is working closely with the Paytm executives to tap the Indian consumer market and enter into India’s e-commerce industry with the tie-up with Paytm.
With this acquisition, Alibaba will take a giant leap forward and speed up to acquire market share. While brands like Amazon will step back and plan alternatives in retaining their markets.
With the existence of e-commerce giants like Amazon and Flipkart, Alibaba will now be competing directly with these e-commerce companies with the help of Paytm. Alibaba understands that India is a major growing market in the online sector and hence they had made inroads indirectly for quite some time now. Now since they have formally announced the presence, it is worth watching how things pan out.
Further, the report also suggests that Alibaba is considering integrating its payment facility Alipay, with Paytm to provide a new user experience to all the users.
One of the main reasons for the great demand in Paytm e-wallets and recharges is Mr Narendra Modi’s demonetization of Rs 500 and 1000 notes. The demonization move compelled many online users to use e-wallet option like Paytm.
According to an earlier report by The Quint, Paytm had crossed more than 7 million transactions with revenue crossing more than Rs120 Crore for a single day post the demonetization.
Paytm was recently in news for its dispute with Paypal on the similarity of the logo design and colour. Paypal claims Paytm are using the same set of colours, branding as PayPal, and therefore had has accused Paytm of copyright infringement.
Paytm always maintains to stay in the news for one or the other reasons. It had involved in the bitter dispute with other leading e-commerce websites. There were accusations and allegations from a leading e-commerce website including Mobikwik, which had accused Paytm of using foreign investments to acquire consumers by offering Cashback offers. The other allegations include the ones made by other brands like eBay and Zomato where they had accused Paytm of copying their trademark to capture consumer markets.
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