Reliance vs Amazon: Can Bezos beat Ambani without getting bruised?

Budget 2019 : The battle for the Indian consumer was never going to be an all-American affair.

Walmart Inc.’s splashy acquisition last year of Flipkart Online Services Pvt., the homegrown e-tailer giving Amazon.com Inc. a solid run for its money, might have given the impression of a two-horse race. But as I argued (here and here), billionaire Mukesh Ambani wasn’t going to watch from the sidelines.

And last week India’s richest man jumped right into the fray. Ambani, chairman of the 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 the expanded retail network formidable sourcing power.

The second hook is Ambani’s telecom business. Consumer e-commerce in India is dominated by the urban middle class. Out of the 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 the 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 the 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 the brand AJIO.

Interim Budget 2019