Bezos vs Ambani: The billionaire bout that was bound to happen

Bloomberg January 22 | Updated on January 22, 2019 Published on January 22, 2019

File Photo - Mukesh Ambani   -  THE HINDU

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

Last year, Walmart Inc’s splashy acquisition of Flipkart Online Services Pvt, the home-grown e-tailer giving Inc a solid run for its money, might have given the impression of a two-horse race. But billionaire Mukesh Ambani was not going to watch from the sidelines.

Ambani, Chairman of Reliance Industries Ltd, has a four-legged plan to connect India’s 30 million small retailers with consumers. First, neighbourhood marts will be connected to Reliance Retail’s footprint of almost 10,000 stores, offering common inventory-management, billing and tax platforms as well as low-cost payment terminals. That will give the expanded retail network a formidable sourcing power. The second hook is Ambani’s telecom business.

Consumer e-commerce in India is dominated by the urban middle class. Of the 500 million internet users, almost 200 million live in rural areas where only one out of four goes online less than once a month.

But the ubiquity of Jio as a 4G telecom carrier, and the revolution it has unleashed in lowering data prices, means that even shops in villages and semi-rural towns can now profitably transact with the 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 fibre broadband connections with Jio. That stickiness gives Ambani the heft to promote private-label fashion, currently housed under the 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, the government has tweaked its e-commerce rules and made them more onerous for Amazon and Walmart-Flipkart. Starting next month, Ambani is pitching the idea that Indians shopping data should be stored locally.

The Government is forcing Amazon CEO Jeff Bezos to compete, with one hand tied behind his back. He could still beat Ambani, but he may get bruised.

Published on January 22, 2019
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