India’s richest man is on the hit list from the world’s richest man. However, there is nothing to turn gray with worry. Last month, on 25th, Amazon.com achieved a provisional order against Reliance Industries’ to purchase the retail business of India’s Future Group. A Singapore-based arbitration panel has asked the Future Group to lay the deal with Reliance Industries on hold. If Reliance could crack the deal with the Future Group, it would get control of many popular and celebrated retail brands including Big Bazaar Brand Factory, Central, Easyday, fbb, and Nilgiris. However, with or without the deal, even today, Reliance remains to be the kind of India’s Rs. 5.17 lakh crore retail industries. Ultimately ecommerce still accounts for only 2% of the retail market in India, which is yes, dominated by Reliance Industries.
The Reliance retail venture, a supplementary of Reliance India Limited was started in 2006. This retail is the largest retailer in the industry; with products offered in all categories including clothing, jewelry, footwear, groceries, and electronics, to name a few. Although Reliance has not grabbed the rapidly changing ecommerce space, experts believe that it can potentially outplay Amazon, as well as other players in the market. Therefore, we have taken this hot topic for our blog today. Keep reading to serve your curious mind with all the answers it seeks!
The Latest Updates on Reliance and Amazon
Last year, Amazon had agreed to buy 49% of one of the Future Group’s confidential firms with the power to buy into flag bearer Future Group Retail Limited after 3-10 years. As the indebted Kishore Biyani’s Future Group signed a contract to sell the retail, wholesale, warehouse, and logistics unit to Indian billionaire, Mukesh Ambani’s Reliance, Amazon dragged the Future Group to arbitration. Offering the provisional award in favor of Amazon, VK Rajah, a former Singaporean judicial officer, asked the Future Group to hold off the deal with Reliance until the final decision is taken.
Amazon considers Future Group’s act of entering into the deal with Reliance as a violation of the contract. The deal would have doubled the power of Reliance and make it India’s largest retailer. With the disputes between Amazon and the Future Group, the former has drawn battle lines with Reliance to win India’s $1 trillion retail markets through online shopping. Therefore, Amazon needs the partnership of an Indian retailer to strengthen its place after being the authorized online sales channel for the retail stores of the Future Group that sells everything, from groceries to apparel, and much more! The arbitration panel of three members comprising of one representative each for Amazon and Future Group, and a neutral umpire, shall provide a decision of the dispute within about 3 months.
Will Reliance Ecommerce Platform beat Amazon?
From Amazon vs. Flipkart to Ola vs. Uber, and Swiggy vs Zomato, the Indian internet market has been a front line for the global tech giants as well as young startups. However, all of a sudden, the Indian multinational conglomerate, Tata Group is apparently developing a ‘super app’ that would be inclusive of all its offerings, from groceries, financial services, fashion and lifestyle, insurance, utilities, electronics, and healthcare, to education – all into a single platform. The group is longing to launch the app by January 2021. Moreover, the almost 50-year-old giant has made significant investments in the internet market apart from instituting major investors – Google and Facebook. The firm owned by the richest man in India is planning to launch the super app in partnership with one of its investors, Facebook. Experts believe that even though the group lagged to enter the market, it has great scope for winning.
It is known without saying that Reliance Industries’ high-tech maneuver has been a matter of discussion for quite a few months. At present, Reliance runs a grocery delivery service, JioMart, in partnership with WhatsApp, a cross-platform messaging and Voice over IP service possessed by Facebook, aside from its online lifestyle platform, Ajio. Last month, Reliance bought a 15% share in Zivame, an online lingerie retailer, and seized Netmeds, an e-pharmacy. The electronic arm of Reliance Industries, Reliance Digital, and its jewelry retail business, reliance Jewels have their individual websites. Although Reliance’s attempt to purchase the major retailer, the Future Group, it still holds a great scope through its impressive super app that can rope all these scattered online businesses into one channel. And, with Google and Facebook, the powerhouses of tech, by their side, the results seem to be quite positive.
Some estimates have found that Amazon.in and Walmart’s Flipkart.com, together dominate 60% of the Indian ecommerce industry. Moreover, many brands including Firstcry, Nykaa, MakeMyTrip, Bookmyshow, etc. are building their brand image significantly. Therefore, if the business conglomerates of India wished to defeat the incumbent, they must be innovative and unique. However, evidently, Reliance Group is wary of these challenges. Although the ecommerce industry, with only 3% of the online retailing, has massive scope for the newbies, the question is, if India is ready for a super app?
If you keep yourselves updated on the Indian market and its emerging players, you might know or must have at least heard of Hike Messenger. In 2018, the homegrown messenger had tried bundling services in order to experiment with the concept of a super app. However, soon enough, the attempt was recoiled considering the plan to be abortive. Coming back to Reliance, after a range of head-spinning investments, from tech-based ventures to Jio platforms, Mukesh Ambani, has been building up the Reliance Retail with the help of some awning investors. Within just 2 months, Reliance’s retail arm has bred over 37,000 crores from 8 investments. Considering the past track records of the giant, it would be no surprise to know further fundraising of Reliance Retails.
According to studies, the strategy of Reliance is to utilize investment, powerful contacts, cash flows from heritage businesses, government relations, and telecom presence to motivate people to do business with them. The acquisition of the future group was simply a part of this area-bombing strategy. Regardless of the feeble online presence, the facts as well as the experts suggest being cautious of this emerging retail threat. With its huge presence throughout the globe and the right partnership, it can potentially influence the demand and supply chain like no other. The shoot in the demand for online goods and services due to the pandemic has surely been a cherry on the cake for the Reliance Group. However, the most challenging factor for Reliance Retail would be to understand and learn the tactics of trade for reliable and faster deliveries, which is something that is mastered by both Amazon and Walmart’s Flipkart from its years of service.
Conclusion
Reliance is already taking over the Indian market through its many successful attempts such as the PoS Terminals. It is aiming to lead the ecommerce as well as the Fintech space in India by leveraging the Infocomm of Reliance Jio’s Point of Sale or PoS terminal in order to build a network with the small-scale merchants. The PoS machine that is used for completing payments by swiping a card is the core to Jio’s plans for building a network as well as an ecosystem with the small-scale merchants. Two of the products of Reliance Industries, the Jio PoS terminal, and the MyJio app has been distributed to the small Kirana stores to establish and enhance its digital presence throughout India. Reportedly, Jio has bagged over 300 million subscribers to the telecom network of the company.
In January 2020, it was reported that Reliance Industries distributed their PoS services in Kolkata, Chennai, Hyderabad, Bengaluru, Pune, and Mumbai at a jet-speed. Also, the company is reported to partner with and FMCG brand, Hindustan Unilever for its incorporating merchants. With this step, Reliance not only aims at targeting rural customers but is also aiming to digitize the process of the merchants ordering goods from wholesale centers and selling to the customers. Moreover, it is estimated that Reliance’s invasion in the PoS space can boost the number of digitized Kirana stores from 15k at present to 5 million by 2023.
Considering all the points, we believe, in the battle of ruling the Indian Ecommerce Space, the Reliance Ecommerce Space is to win. The company has already sowed the seeds with emerging deep roots to rule the Indian ecommerce market. And that time, we think, is not too far. Within just 2 months, the company shall be publishing its super app, and like you, we are eagerly waiting to see the results!
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