![](\"https:\/\/www.thirdeyesight.in\/wp-content\/uploads\/2022\/10\/1605064276-421.jpg\")
<\/div>\n\nBillionaire Mukesh Ambani obliterated rivals in India\u2019s telecommunications sector by selling $2 data plans and free voice calls. Four years later, he\u2019s deploying a very similar tactic — cutthroat pricing — to gain an edge in the country\u2019s increasingly competitive e-commerce space.<\/p>\n\n
As India this week hits the peak of its biggest shopping season, the festival of Diwali, the tycoon\u2019s retail websites — including JioMart — are elbowing their way into a space long dominated by Amazon.com Inc. and Walmart Inc.\u2019s local unit Flipkart Online Services Pvt.<\/p>\n\n
Ratcheting up competition, Ambani\u2019s portals are offering blockbuster discounts of as much as 50% on popular sugary confections and other holiday staples like spice mixes for India\u2019s rice delicacy, biryani. Meanwhile, his Reliance Digital website is selling some flagship Samsung smartphones at prices cheaper than rivals, with as much as 40% rebates.<\/p><\/div><\/div>\n\n
![\"JioMart](\"https:\/\/bsmedia.business-standard.com\/_media\/bs\/img\/article\/2020-11\/11\/full\/1605063412-0174.jpg?im=Resize,width=640\" "\\"JioMart")
<\/div>\n\nJioMart saleReliance’s JioMart website is currently offering up to 50% discounts<\/p>\n\n
It\u2019s a push that comes as Ambani\u2019s sprawling conglomerate, Reliance Industries Ltd., is flush with cash. After raising an eye-popping $20 billion for its technology venture, it\u2019s shifted fundraising to its retail arm, which has won over $6 billion in investment in recent weeks from heavyweights like KKR & Co. and Silver Lake. Already India\u2019s biggest brick-and-mortar retailer, Ambani\u2019s online ambitions pit him against the two U.S. giants, both of which have invested big in India.<\/p>\n\n
The country, one of the last big consumer markets, is still up for grabs, and Morgan Stanley estimates that India will generate $200 billion in e-commerce sales by 2026. Yet, the billionaire\u2019s triumphs in telecommunications — where he started as a tiny player, but outpaced established rivals by undercutting them on price and capitalising on regulatory changes — are a cautionary tale for the American giants.<\/p><\/div><\/div>\n\n
Huge Edge<\/p>\n\n
In retail, Ambani\u2019s firm has a huge edge: Government policies are increasingly stacked in favor of domestic retailers, of which Reliance is the largest. Since the end of 2018, India\u2019s foreign investment rules have also barred Amazon and Walmart\u2019s local unit Flipkart from featuring exclusive products and owning inventory, in a bid to restrict their ability to directly influence prices and offer discounts. International companies aren\u2019t allowed to own more than 51% of local brick and mortar supermarket chains. Even that limit is subject to conditions such as setting up only in cities with populations of less than 1 million.<\/p>\n\n
With his local strategy, low-cost procurement and chain of brick-and-mortar stores, Ambani has the ability to shake up online retail, said Siju Narayan, Chief Experience Officer, RexEmptor Consult LLP in Mumbai. \u201cJioMart can dent the fortunes of grocery e-commerce majors like Bigbasket & Grofers,\u201d he said, referring to the country\u2019s biggest online grocers. \u201cAnd impact the grocery, home & personal care category of e-tail majors like Amazon and Flipkart in coming days.\u201d<\/p>\n\n
![\"Many](\"https:\/\/bsmedia.business-standard.com\/_media\/bs\/img\/article\/2020-11\/11\/full\/1605063653-7394.jpg?im=Resize,width=640\" "\\"Reliance")
<\/div>\n\nMany of Reliance’s brands can be sought under one roof at Reliance Malls.\nRepresentatives for Reliance and Bigbasket declined to comment, while those for Walmart, Amazon and Grofers didn\u2019t respond to requests for comment.<\/p>\n\n
Tweaked Rules<\/p>\n\n
Ambani\u2019s success in telecom shows his ability to benefit from pricing and policy. India\u2019s government tweaked rules in 2013 to create a \u201cunified license\u201d that allowed operators with a broadband wireless permit to offer voice calls by paying a one-time fee. Only one operator had such a permit nationwide at that time \u2013 Reliance Jio. The new rules helped it move swiftly.<\/p><\/div><\/div>\n\n
After receiving a unified license and rolling out Reliance Jio\u2019s telecom services in September 2016, Ambani sold voice and data plans at rock bottom prices. That made digital services more affordable for millions of Indians. Although rivals won similar licenses, some went bankrupt amid the ensuing price war, including his younger brother Anil\u2019s Reliance Communications Ltd. Non-state operators in telecommunications eventually dropped to three from at least a dozen. Jio turned profitable in 2018. It\u2019s currently India\u2019s biggest wireless operator with over 400 million subscribers.<\/p>\n\n
High Stakes<\/p>\n\n
In India, the stakes are high for the American retailers. Jeff Bezos, Amazon\u2019s hard-charging founder and chief executive officer, has pledged to invest $6.5 billion there. Walmart spent $16 billion in 2018 to acquire Indian portal Flipkart in its biggest ever deal, and has invested over $1 billion this year in the e-tailer and steadily plowed cash into its sister unit, payments service PhonePe.<\/p>\n\n
But for Ambani, 63, Asia\u2019s richest man with a net worth of $78 billion, the e-commerce push may turn out to be tougher than telecom. First, he will be up against formidable rivals. The wireless operators he defeated were mostly homegrown players, lacking the heft, experience and deep pockets of Amazon or Walmart. Also his group\u2019s e-commerce websites are newer compared to its rivals\u2019.<\/p>\n\n
![\"The](\"https:\/\/bsmedia.business-standard.com\/_media\/bs\/img\/article\/2020-11\/11\/full\/1605063829-771.jpg?im=Resize,width=640\" "\\"The")
<\/div>\n\nThe Jiomart shopping app<\/p>\n\n
Reliance group\u2019s JioMart \u2013 which only started this year and is still in the beta phase \u2013 has had delivery snafus and refund delays, and some users haven\u2019t been shy about venting on Twitter. All that means winning big against Walmart and Amazon could take years.<\/p>\n\n
Future Business<\/p>\n\n
Yet, getting it right is key because Ambani has cast retail and technology as the future of Reliance, which got its start in textiles under his father and then progressed into petrochemicals and oil refining. Two of his oldest children, Ivy-league educated twins Isha and Akash, are on the board of Reliance Retail Ventures Ltd.<\/p><\/div><\/div>\n\n
Reliance is already India\u2019s biggest company and its market capitalisation of $185 billion equals about 6.6% of India GDP. Its heft would only increase if it wins a greater foothold in e-commerce — something that\u2019s increasingly becoming important in India, which has suffered a lockdown for much of the year due to the pandemic and where organised retail is yet to penetrate rural corners.<\/p>\n\n
The pandemic is offering a boost to Reliance because many local stores can\u2019t offer aggressive discounts due to financial difficulties, said Laiji Varghese, who runs a provision store in Nerul, a town in the outskirts of Mumbai, and has a partnership with Reliance to deliver orders.<\/p>\n\n
\u201cReliance Retail is a big bulk player with deep pockets,\u201d she said. \u201cThey have the financial muscle to offer such discounts compared to others.\u201d<\/p>\n\n
Samsung Phones<\/p>\n\n
For Diwali, JioMart has a \u201cBestival Sale\u201d on and has been touting the \u201cseason\u2019s biggest grocery sale\u201d with large discounts and cashback running through Nov 8. Flipkart and Amazon are also showcasing a slew of discounts, putting the three companies neck to neck.<\/p>\n\n
![\"The](\"https:\/\/bsmedia.business-standard.com\/_media\/bs\/img\/article\/2020-11\/11\/full\/1605063919-5473.jpg?im=Resize,width=640\" "\\"Jio")
<\/div>\n\nThe “Bestivel Sale” was advertised in a wrap-around cover of an edition of The Times of India supplement the Bombay Times last weekend<\/p>\n\n
Yet on some key items, Ambani\u2019s sites are offering bigger price cuts. A Samsung S20, this year\u2019s flagship model from the world\u2019s biggest smartphone maker, for instance, was going for 43,999 rupees at the start of this week on Reliance Digital. The same phone on Amazon\u2019s India website was available for 47,990 rupees and on Flipkart for 69,999 rupees.<\/p>\n\n
Regardless of who draws more customers and offers the biggest price cuts this holiday season, a pitted, protracted battle for India\u2019s online shoppers is likely to play out in the coming years.<\/p><\/div><\/div>\n\n
Complex Restrictions<\/p>\n\n
Despite the complex pricing restrictions that Walmart and Amazon face in India, they have been able to showcase discounts offered via manufacturers and brands. In some cases, they are able to restructure their relationships with sellers so they can legally offer price cuts, and have allied with banks and credit card companies, which are allowed to offer deals that give shoppers price benefits on websites.<\/p>\n\n
Yet, in the long term, pricing rules favoring local companies would allow Ambani\u2019s JioMart and other websites to be more nimble in tweaking costs since they are bound by fewer restrictions.<\/p>\n\n
JioMart and Reliance Retail account for around $12 billion of India\u2019s retail market combining brick and mortar and digital sales, according to Ankur Bisen, senior vice president and head of Technopak\u2019s retail consulting division. Meanwhile, Amazon and Flipkart, leveraging their pure online plays, can claim about $14 billion each, he said.<\/p>\n\n
![\"Amazon](\"https:\/\/bsmedia.business-standard.com\/_media\/bs\/img\/article\/2020-11\/11\/full\/1605064043-7613.jpg?im=Resize,width=640\" "\\"Amazon")
<\/div>\n\nAmazon opened a 15-storey campus at the end of August last year in Hyderabad’s technology and financial district<\/p>\n\n
Although Amazon and Walmart are far ahead in online retail, a winner will need to straddle both domains, physical and virtual, to cater to India\u2019s diverse and heavily rural geography. Yet the restrictions on foreign companies owning grocery stores, puts them on a backfoot. That\u2019s in keeping with Prime Minister Narendra Modi\u2019s goal of nurturing home-grown champions. Across the border, China\u2019s protection of domestic companies has created technology behemoths like Alibaba Group Holding Ltd. and Tencent Holdings Ltd.<\/p>\n\n
Ambani has built his businesses with a decades-long understanding of India\u2019s bargain-hungry consumers. Over the years, he\u2019s also aligned Reliance\u2019s own ambitions with government goals across different administrations. In 2016, when he launched Reliance Jio, the telecom business, he promoted it as part of Modi\u2019s Digital India initiative.<\/p><\/div><\/div>\n\n
India\u2019s Alibaba<\/p>\n\n
\u201cNarendra Modi has clearly decided that he wants to produce an Indian equivalent of Alibaba or Tencent, and he knows Reliance is the only plausible candidate,\u201d said James Crabtree, an associate professor of practice at the Lee Kuan Yew School of Public Policy at the National University of Singapore, author of The Billionaire Raj, which chronicles India\u2019s economic opening and has Ambani\u2019s much-storied Mumbai home on its cover.<\/p>\n\n
![\"Narendra](\"https:\/\/bsmedia.business-standard.com\/_media\/bs\/img\/article\/2020-11\/11\/full\/1605064163-1883.jpg?im=Resize,width=640\" "\\"Ambani")
<\/div>\n\n