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Mukesh Ambani's Reliance prepares to challenge Amazon in Indian e-commerce

Can Reliance do to Amazon and Flipkart what it did to Airtel and Vodafone in the e-commerce segment?

  • Published: April 8, 2019 2:45 PM IST
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After taking on incumbent telecom operators such as Airtel, Idea Cellular and Vodafone, Mukesh Ambani has now set his sights on e-commerce giant Amazon in India. Mukesh Ambani, Asia’s richest person has made a string of acquisitions and stake purchases to expand his focus on e-commerce. The acquisitions show how Ambani is reshaping his company from a petrochemical giant to a technology giant. Having established a clear lead in the telecom space in terms of data consumption, Ambani’s Reliance Group, is further pivoting towards consumers offerings, where Amazon India is competing with Walmart-backed Flipkart to take a larger share in e-commerce business.

According to Bloomberg, Reliance Group has been making mergers and acquisitions across verticals such as media and telecom, manufacturing, technology, retail and e-commerce since July 2017. The acquisitions and mergers reflect Ambani’s efforts to grab a major share of Indian e-commerce market. Morgan Stanley estimates the online shopping space will grow to be valued at $200 billion by 2028 from about $30 billion last year. By 2022, Cisco estimates to India to have 829 million smartphone users and it is expected to result in surge for online services and products.

In July, Ambani told shareholders that company’s e-commerce effort will involve unlisted businesses such as Reliance Retail Ltd. and Reliance Jio Infocomm Ltd. He said that the e-commerce business will use augmented reality, holographs and virtual reality to create an “immersive shopping experience”. He also added that consumer business will contribute as much to the conglomerate’s overall earnings as the energy business by the end of 2028.

Ambani also announced that the e-commerce platform will onboard millions of brick and mortar stores that currently dominate the Indian retail market. This alone would give Reliance a big advantage over Amazon India and Flipkart. The Reliance e-commerce platform would enable small merchants to “do everything that large enterprises and large e-commerce players are able to do,” Ambani said.

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While Reliance has not commented on the progress around this initiative, the acquisitions show that the company is building the path one step at a time. Last week, Reliance acquired Haptik, a maker of chatbots, for $101 million. It has also acquired Radisys Corp that will help expand presence in Internet of Things and 5G. Bloomberg notes that acquisitions such as Vakt Holdings and Grab a Grub will help Reliance build a digital ecosystem leveraging block chain technology and deliver food. Ambani’s Reliance Group has been acquiring smaller companies, like Apple does, that paint a larger ambition in the backdrop.

  • Published Date: April 8, 2019 2:45 PM IST