The battle for Indian consumer was never going to be an all-American affair.Walmart Inc.'s splashy acquisition last year of Flipkart Online Services Pvt., homegrown e-tailer giving Amazon.com Inc.
a solid run for its money, might have given impression of a two-horse race.
But as I argued (here and here), billionaire Mukesh Ambani wasn't going to watch from sidelines.And last week India's richest man jumped right into fray.
Ambani, chairman of petrochemicals-to-telecom conglomerate Reliance Industries Ltd., has a four-legged plan to connect India's 30 million small retailers with consumers.
One, neighborhood marts will be connected to Reliance Retail Ltd.'s footprint of almost 10,000 stores, offering them common inventory-management, billing and tax platforms as well as low-cost payment terminals.
That will give expanded retail network formidable sourcing power.The second hook is Ambani's telecom business.
Consumer e-commerce in India is dominated by urban middle class.
Out of country's 500 million Internet users, almost 200 million live in rural areas where one out of four goes online less than once a month.
No wonder number of online consumers, while growing rapidly, is expected to be only about 120 million this year.
Reliance Jio Infocomm Ltd.
alone has 280 million digital subscribers.The ubiquity of Jio as a 4G telecom carrier, and revolution it has unleashed in lowering data prices, means even shops in villages and semi-rural towns can now profitably transact with less affluent customers by using a hybrid offline-online model.Third, Indians are watching almost 5 billion hours of video a month on their mobile phones and fiber broadband connections with Jio.
That stickiness gives Ambani heft to promote private-label fashion, currently housed under brand AJIO.Finally, Ambani's ability to influence policies in his home market shouldn't be underestimated.
Just as Reliance gets ready to push ahead, Indian government has tweaked its e-commerce rules and made them more onerous for Amazon and Walmart-Flipkart.
Until now, foreign retailers had found ways around a low that allows them to act only as pure marketplaces that don't stock their own inventories or offer discounts.
Now that loopholes are being plugged starting next month, Ambani is pitching idea that Indians' shopping data should be stored locally.Reliance Jio's digital investments have already exceeded $40 billion.
But in India's hyper-competitive telecom market, average revenue it can get from users isn't even $2 a month.
One way to make a carriage- and content-centered business spew out profits is to make it a triple play by throwing commerce into mix, and lacing it with good, old-fashioned lobbying.The Indian government is forcing Amazon CEO Jeff Bezos to compete with one hand tied behind his back.
He could still beat Ambani, but he won't be able to avoid getting bruised.(Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services.
He previously was a columnist for Reuters Breakingviews.
He has also worked for Straits Times, ET NOW and Bloomberg News.)Disclaimer: The opinions expressed within this article are personal opinions of author.
The facts and opinions appearing in article do not reflect views of TheIndianSubcontinent and TheIndianSubcontinent does not assume any responsibility or liability for same.(Except for headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)