Illustration: Chen Xia/GT

Just months after recording the largest IPO in history, Chinese e-commerce giant Alibaba Group is looking beyond its lucrative home market for new growth opportunities. If recent moves by Alibaba founder Jack Ma Yun are any indication, the Indian market appears high on the company's list of global targets. Ma reportedly followed a high-level Chinese business delegation on a trip Wednesday to India, where he stated that Alibaba is eager to boost its investment in the country and collaborate with local entrepreneurs.

Alibaba has had a presence in India since 2007, when the company established a special channel geared toward helping Indian suppliers connect with buyers both at home and abroad. Business has grown slowly though, despite the huge potential of the Indian market. As the market develops, Alibaba may have to quicken its steps if it wants to carve out a strong led.

India has the world's second largest population, with 1.25 billion people calling the country home in 2013. For Alibaba and others, the relative youth of this population means India is brimming with potential shoppers. According to statistics, some 65 percent of Indian citizens are below the age of 35, placing nearly two-thirds of the country in the demographic category that has traditionally been the most eager to shop and engage in e-commerce.

On the business side, statistics show that fully 51 percent of Indians are self-employed, while about 8 million local businesses are classified as small- and medium-sized enterprises. Based on the experiences of China and other countries, the benefits of e-commerce can greatly help them cut costs, improve transaction efficiency, shorten remittance time and expand the scope of their sales.

Online retail is just starting to take off in India, leaving massive space for growth for those who can take an early market lead. Indian e-commerce sales totaled a scant $2 billion last year, compared with totals of $300 billion and $260 billion in China and the US respectively, according to media reports citing New Delhi-based consultancy Technopak Advisors. Looking ahead, researchers at Noruma foresee the value of India's e-commerce industry shooting to $43 billion in 2019. What's more, the country is expected to have 100 million online consumers by 2016, according to a report from Google.

Of course, Alibaba isn't the only one that has taken note of trends in India. Investors from around the world are eagerly pouring into the country in anticipation of a retail boom.

In October, for instance, Japan's SoftBank Corp invested some $800 million in two Indian online companies, including local e-commerce firm Snapdeal. In July, Flipkart Internet Pvt, India's largest online retailers by sales, received $1 billion dollars from a consortium of investors that included Morgan Stanely Investment Management and Sofina; a sum which comes on top of the $700 million in investor funding it has received since 2007. On the heels of this news, global giant Amazon.com Inc also announced in July it would invest $2 billion in India, where its localized e-commerce platform had attracted 5,000 merchants as of June.

Of course, serious problems still pervade the Indian market. Issues holding back e-commerce growth include outdated payment methods, fierce pricing competition and the slow spread of Internet access.

For starters, there are only some 2 million retailers in India who accept payment by credit card, according to the country's central bank. Most are limited to accepting cash only. In terms of e-commerce transactions, most sellers are also forced to accept cash on delivery. 

Cutthroat pricing competition has also weighed on margins. For example, media reports say Firstcry, Hushbabies and Babyoye - three of India's largest online purveyors of items for parents and children - have been locked in a bitter pricing war for years.

More importantly though, Indian Internet access lags behind many other developing markets. Data from the International Telecommunications Union show that only 15 percent of Indians have the opportunity to use the Internet. This compares with 46 percent in China.

Alibaba has to confront these and other obstacles if it wants to hone its competitive edge in India, where it still commands a limited share of the market. Despite its numerous achievements in China, the company faces no guarantee of success in the Southeast Asian country. As it works to expand its footprint, tackling logistics and infrastructure problems should be a top priority.

Across many parts of India, roads are narrow, crowded and poorly maintained. What's more, a highly fragmented shipping industry means that e-commerce firms often have to rely on many different courier companies when it comes to reaching shoppers outside of major cities.

Giants like Flipkart have worked to overcome such adverse conditions by setting up whole logistics companies, complete with warehousing and delivery operations. Amazon also announced in July that it would build another five warehouses in the country, complementing the two it already has there. To keep pace with its competitors, Alibaba should think seriously about building up its own logistics architecture in India.

With so much at stake, the world's largest e-commerce companies are not sitting idle in India. If Alibaba cannot at least keep pace with its more nimble peers, it risks becoming a marginal player in one the world's most promising markets.

The author is a reporter at the Global Times. bizopinion@globaltimes.com.cn