The buildup to Diwali, the Indian festival of light that takes place in November this year, is already under way, and nothing signals this event as decisively as the frenzied bouts of shopping taking place across India.
In the online world, the ritual is enacted with great fanfare in a fierce competition between the two reigning kings of e-commerce: Jeff Bezos' Amazon, and Flipkart, purchased by Walmart for $16 billion earlier this year. Both Amazon and Flipkart have made it a habit to loudly and publicly declare themselves victorious during these months.
This is grossly misleading, since the real war in e-commerce will in all probability be fought not between these two companies, but instead between a juggernaut equivalent to Amazon in moxie and clout, if not in market cap. Namely, Reliance, steered by India's richest man Mukesh Ambani.
Bezos built Amazon from the ground up in the '90s, while Mukesh Ambani inherited the petroleum-to-textiles empire from his legendary businessman father Dhirubhai Ambani and expanded it further. Yet, the Ambani scion has risked everything in an all-in bet that wants to very soon provide and control pretty much everything you consume, from your phone to its data, to content from India's leading publication, to your jeans, groceries, milk, your television, and any programming on it. The list is endless, and Ambani wants it to be so. Did I mention the immense piles of data generated by all this activity to be mined for more opportunities?
This is Ambani's grand triple play, a breathtaking -- if it works -- marriage of carriage, content, and commerce, unprecedented in India and probably the rest of the world, and so far unfettered by any shackles from bodies like the Competition Commission of India that looks out for monopolistic practices.
This summer, Ambani himself pointed this out to his shareholders by declaring that the company was staring at its "biggest growth opportunity in creating a hybrid, online-to-offline new commerce platform".
The first salvo of Ambani's assault has been the "carriage" part -- or the around $40 billion bet on telecom that introduced Jio to India in 2016, and has caused carnage in the industry since then.
In just two short years, propelled by the seemingly bottomless coffers of the Reliance oil and gas business, Jio has gobbled up 250 million subscribers that once belonged to other operators, lured some new ones in, and caused widespread bankruptcies and consolidation in the industry.
Another component of the "carriage" play is in the form of JioGigaFiber, fixed-line fibre broadband via set-top boxes scheduled to proliferate in 1,100 cities across India targeting 50 million TV watchers.
Just this week, the company announced the acquisition of majority stakes in Hathaway Cable and Den Networks, giving it an instant 24 million cable-connected subscriber homes through which it could piggyback its fibre, giving you an idea of how fast it is moving to make the cable play a reality.
Reliance's ultimate plan is to have people buy as many things from it as possible -- that's how the company will make all its money and cover its bets. But for that to happen, it first needs eyeball stickiness, which means buying, building, or sharing content on company pipes so that the consumer never has to leave her phone or television.
Unfortunately, as I had observed in this piece, with content at a premium and a dearth of players in the market, apart from inking the usual content sharing deals with the few usual suspects, Reliance has decided to launch a production house of its own and has begun hiring scriptwriters.
It has also previously snapped up news outfits in the print, internet, and television realms by buying Network 18, which has: TV channels including CNBC TV18, CNN-IBN, and CNN Awaz; websites with firstpost.com, moneycontrol.com; magazines including the licence for Forbes India; and entertainment channels with Colors, MTV, and Homeshop Entertainment, among other businesses.
With carriage and content taken care of, Reliance wants you to be firmly guided in the direction of its vast retail empire in what Ambani says will be a fully immersive shopping experience using holographs and augmented reality.
The retail empire that will now also be available online is a sprawl. It includes Reliance Retail, with 7,500 stores in 4,400 cities, which apparently experiences 350 million footfalls and with total revenues of close to $7 billion and growing at a 100 percent gallop. This includes Reliance Trends as well as consumer electronics brand Reliance Digital. It also includes the Reconnect brand of consumer appliances and electrical goods, and operates the largest portfolio of 41 international brands like Gas, Steve Madden, and Diesel.
Part of its plan for nationwide retail domination involves building a stronghold in the nascent grocery delivery industry. Existing players such as BigBasket and Grofers could get a rude awakening when Reliance gets serious about the grocery play.
Ambani's company already sold over 500,000 tonnes of groceries last year, and its on-ground chain stores Reliance Fresh and Reliance Smart, which number over 500 outlets across the country, are just begging to be integrated into its online grocery delivery website RelianceSmart.in, which is yet to take off. As India grows from a $35 billion e-commerce market to a predicted $202 billion in 10 years, Reliance is betting that it will be perfectly positioned to pounce.
The long and the short of it is that Jeff Bezos could have a real battle ahead of him. Mukesh Ambani plays to win regardless of the costs, is street savvy, is on home turf, and is politically connected like no other businessman. This has a direct connection to the next point -- which is how critical legislation has become to setting down basic rules for the e-commerce terrain that lies ahead, and in generating wealth for those fortunate to be close to the corridors of political power.
The draft policy for e-commerce rules that the government was scripting, for instance, has two crucial stipulations that are going to impact a company like Amazon negatively.
One, foreign e-commerce outfits -- which includes Indian startups with majority foreign funding like Flipkart -- cannot hold inventory, something that Amazon will find almost catastrophic, since its competitive advantage stems from its logistics operation. Two, data generated from e-commerce activities will have to be stored locally after a period of two years, thereby significantly ramping up costs for foreign outfits.
Both of these clauses were hugely influenced by Reliance officers who were present during the draft discussions -- while representatives of Flipkart, Amazon, and Uber were not -- suggests the Indian technology publication Factor Daily.
Of course, it is entirely possible that the sheer scale of Reliance's gambit, which involves all parts firing together at full power, may be ultimately too difficult to orchestrate or that another disrupter creeps up and upends e-commerce in India as we have known it.
As it stands, Ambani hasn't set the world on fire with his $10 billion bet on oil fields or his $8 billion bet on shale gas in the US. And to really win in this game that intertwines e-commerce with innovation, like Tencent has done in China, especially with WeChat payments and gaming, Reliance needs to demonstrate a culture of dazzling, cutting-edge innovation, which it is miles from embodying.
Someone who has been at the confluence of cutting-edge innovation and commerce is Jeff Bezos. Bezos has proven himself to be the kind of global businessman with extraordinary leverage, piles of cash, and boatloads of cunning that Mukesh Ambani will have a hard time outspending or outsmarting.
It will be fascinating to watch the two go toe-to-toe in a retail slugfest where hopefully the real winners will be India's consumers.
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