Reliance Vs Amazon

The rapid adoption of the internet along with the smart phones, has led to rise in the growth potential of online retail. With increase in population and urbanization, it has become easy for companies to deal with complex logistics challenges when developing their services. Some of the key players have decided to focus more on the consumer demands, with greater time efficiency. Technology, and specifically data analytics, can help in this regard as these allow not only optimization of consumer marketing, but also help drive online commerce growth further.

As we all know, how Ambani, the powerful industrialist, built an energy giant, and launched nation's biggest telecom operator, which has altered lives of millions of Indians, as well as transformed our economy, in general. He has been able to attract 370 million people, to his telecom company in less than 4 years, with the strategy of cut-price mobile data. He already owns country's largest retail chain,Reliance Retail. From being a petrol and petrochemical-focused company, he has been able to hold his mark and move forward, swiftly and successfully in the past four decades.

Now coming to the American giant, Amazon, Jeff Bezos has been able to make Amazon, our go to shopping cart, and it has been able to become home for millions of customers, by providing them with wide range of products from books to electronics and fashion. It has its retail operations in more than 15 countries with a market capitalisation of $1.1 trillion. Amazon has been able to become the most powerful e-commerce company, because of its efficient technological innovations, fostering exceptional results. Not only after-sales services, but it also caters to the customers by maintaining relationship with their vendors so as to provide the customers, with discounted pricing. The most important part of doing an e-commerce business is the positioning of the company and Amazon has been able to claim its throne, there.

Recently, the Indian government imposed new barriers to FDI in e-commerce and rejigged ownership rules of sellers on the platform, under pressure from trade bodies. Amazon and Walmart-owned Flipkart, basically supply the goods to the merchants, who again sell their products on their market places this was done because rules barred foreign investors from selling there own goods on the marketplace directly. But as per the new regulations, no merchant can source more than 25% of its goods from any company that is owned by an e-commerce company. The regulation would not only make their businesses tight but also reduce their market share by a greater margin. Reliance was the part of government decision about the particular matter, but Amazon and Flipkart were not invited there.

Ambani recently stated that "Jio and Reliance Retail will launch a unique new commerce platform to empower and enrich our 12 lakh (1.2 million) small retailers and shopkeepers in Gujarat," in a Summit attended by Prime Minister, Narendra Modi. According to what he said, he plans to roll out the venture from Gujarat itself, before expanding all across India. Ambani has decided to connect the 30 millions small retailers with the customers. There are two major advantages to it. One, the neighborhood stores would each be connected to Reliance Retail footprint of almost 10,000 stores and thus offer them with a common ground for inventory as well as low cost payment. Ambani has been trying to put up a triple game for itself as well as for its competitors that is a marriage of carriage, content and commerce. It has been able to do the “carriage” part, by offering Jio in the year 2016 which is second advantage for it. Shortly after 2 years and attracting 250 million customers, it returned with another component of the “carriage” play that is JioGigaFibre, and it is expected to target 50 million subscribers. Talking about the content part, Ambani has already started owning the production houses. Now the question arises, will Ambani be able to survive the e-commerce market alongside Amazon and Walmart ? The answer is right there, but the process would not be that easy.

The oil conglomerate has been able to have tight hold of its market share in various interests, starting from the telecom to the retail sector. It already has a high footprint in India and its decision to launch an e-commerce platform, will help Ambani, to focus on his goal, of generating half of the group’s income from the consumer businesses.The move would be a strategic one, as they would be expanding their chain from oil and gas (contributing to 80% of the business) to the consumer business. Major advantage that Ambani would have is the “home-court ground” on which it would be playing, as Alibaba in China. Seeking the trust of the consumers, have been very easy after the launch of Jio, with free calls and cut price data deals, making some of the players to either leave the market or enter into a merger, thus making some disruptions in the telecom sector. Reliance already has some minimum presence in the online sector through Reliancesmart.in for the groceries and AJIO.com for fashion. But what they are coming up with now, is pretty big, and might emerge as a well established company with a lion size of market share. Ambani, trying to connect the 30 million retailers with the consumers, will be a very big step, for the Indian e-commerce market. It would not be easy to compete against Amazon and Walmart, but once Reliance gains the market power, they can surely pose a threat to the already operating players in the Indian market.