Niraj Choksi’s world revolved around a sweaty little room – before Alibaba

Niraj Choksi’s world revolved around a sweaty little room – before Alibaba opened the door to untold riches.

The little corner of his ramshackle home in the boondocks of Mumbai’s southern outskirts served as the “factory” of the Choksi family’s struggling jewellery business.

Its only workers: Niraj and his brother. They would handcraft the items their mother would design and their father peddle from door to door. Annual turnover: less than HK$7,000.

Somebody suggested trying the internet to find buyers.

“Back then, I didn’t even know one can trade online,” Choksi said. But he gave it a shot, anyway, and signed up with several online platforms.

While none of the other sites led to anything, he had his first enquiry on Alibaba – a buyer from Sweden looking to order 150 bracelets. That was in November 2006. The first online order followed soon after.

DVN Traders employs today more than 1,000 people across nine factories – real industrial facilities.

Last year’s turnover of the company, which specialises in diamond-studded jewellery, amounted to US$3.5 million. It has already notched up US$4.2 million in the first half of this year under the able category_idance of Choksi, who now goes by the fancy title of director, global sales, marketing and business development.

The Chinese e-commerce giant’s exploits in India are not widely known. But with more than three million registered members like Choksi, India is home to the second-largest number of suppliers on Alibaba.com after China itself, accounting for nearly a tenth of the business-to-business (B2B) platform’s global user base.

Though membership numbers in India have rapidly increased over the years – with a 22 per cent rise last year – Alibaba’s presence is difficult to discern outside the realm of small and medium-sized enterprises in which it operates.

“We believe in growing through word of mouth. Advertisements are not that important for supplier nations,” Alibaba’s India head, Khalid Isar, says.

With its innovative platform and reputation for connecting buyers and sellers, word of mouth is plentiful. Trichur Shankar Raman, chief executive of Mumbai-based leather products exporter Asian Adores, for example, uses other platforms, as well, but swears by Alibaba.com.

“Before Alibaba, we were on Indiamart. But Alibaba screens both suppliers and buyers. Other platforms usually don’t do that,” Raman said.

Choksi recalls the rigorous scrutiny he was put through.

“We weren’t just asked to list our products and upload their pictures. Alibaba demanded very specific and detailed information on every product. Then they checked out our workshop. We felt secure, as we realised it would do the same homework with buyers.”

Alibaba has long broadened its reach from being a B2B platform to connecting businesses with consumers through Tmall and connecting members of the public, who sell to each other through Taobao.

Though Tmall and Taobao handled more goods than Amazon and eBay combined last year, these Chinese-language sites are still largely restricted to the home market.

In India, as in other places outside China, the company is sticking to the B2B model, as it believes there is still a huge untapped market in this segment.

A recent study by the Federation of Indian Chambers of Commerce and Industry and Google found fewer than 5 per cent of India’s 26 million SMEs have a web presence, and even among those that do, only 27 per cent use it for e-commerce.

According to Ernst & Young, India’s total B2B market in 2011 stood at just US$50.37 million, a fraction of a small but rapidly growing overall domestic e-commerce market of US$10 billion.
Alibaba’s model is simple.

“Any SME can join us for free and have its profile verified. But for more advanced services, such as showcasing products, they are required to pay,” Isar said.

The company also organises countrywide training sessions with local industry chambers to promote online trading in a country notorious for its low internet penetration. But even at a penetration rate of less than 16 per cent of the population, India’s online traffic translates into nearly 10 times Australia’s population in absolute numbers and is expected to reach 243 million by June next year, overtaking the United States as the world’s second-largest internet user base after China.

Isar is understandably upbeat on the prospects in the country. As connectivity spreads, Alibaba stands to collect on both ends of the market. Most buyers from Indian suppliers on the e-commerce site are Indians themselves, at 21 per cent.

“When I was looking for an app for real-time video images of my factories so that I can monitor them on my mobile phone, guess how I found it? Through Alibaba,” gushes Choksi, who bought the app from a Chennai software developer in 2009.

Other major markets for Indian suppliers on Alibaba are the United States (12 per cent), Britain (4 per cent) and China (4 per cent). Isar says these markets are growing, too, as interest in Indian manufacturers is on the rise globally.

“[The country] is being recognised as a sourcing hub,” Isar said. “In many industries, including apparel, handicrafts and jewellery, Indian suppliers are much sought after. Indian manufacturers also offer competitive prices and a lower language barrier. As English is commonly spoken and understood here, foreign buyers find dealing with Indian suppliers a lot easier.”

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