{"id":5579,"date":"2019-05-21T09:01:00","date_gmt":"2019-05-21T09:01:00","guid":{"rendered":"https:\/\/www.thirdeyesight.in\/?p=5579"},"modified":"2023-09-28T19:38:33","modified_gmt":"2023-09-28T14:08:33","slug":"is-amazon-a-friend-or-foe-indias-two-largest-retailers-have-divergent-views","status":"publish","type":"post","link":"https:\/\/myechoproject.com\/TES\/is-amazon-a-friend-or-foe-indias-two-largest-retailers-have-divergent-views\/","title":{"rendered":"Is Amazon a friend or foe? India\u2019s two largest retailers have divergent views"},"content":{"rendered":"\n

Written By Sangeeta Tanwar<\/p>\n\n

\n\n<\/div>\n
\n

Two of India\u2019s leading retail chains are currently preparing the ground for their full-fledged e-commerce forays, albeit in totally different ways.<\/p>\n\n

While the Kishore Biyani-led Future Group, which operates the popular Big Bazaar hypermarket chain, is busy listing its labels on Amazon, rival Reliance Retail is withdrawing its products from all e-commerce platforms, as parent Reliance Industries (RIL) gears up to launch its own online marketplace.<\/p>\n<\/div><\/div>\n\n

For both the traditional players, cracking online sales is important as they prepare for a future beyond high street retail.

\n\nOnline sales in India will balloon from last year\u2019s $18 billion (Rs1.25 lakh crore) to $170 billion by 2030, Jefferies India predicted recently. This potential aside, Indian e-commerce is still nascent and retailers are still perfecting their strategies.

\n\n\u201cE-commerce is now a game of two dimensions, one of scale and the other of last-mile ubiquity. Whoever gets this right, will manage growth, revenue, and customer acquisition,\u201d said Anil V Pillai, director of the independent marketing firm Terragni Consulting.

\n\nAs for the Future Group, it thinks the best way to achieve this is by riding piggyback on Amazon\u2019s proven capabilities in scale and last-mile delivery.<\/p>\n\n

How the plan evolved<\/b><\/p>\n

In 2016, the Future Group had made its first e-commerce acquisition by buying out the struggling furniture retailer FabFurnish from its German incubator Rocket Internet. Biyani had hoped to find synergies between the startup and his group\u2019s furniture brand Hometown.

\n\nA year later, hit by heavy losses, FabFurnish was shuttered. Biyani downplayed the move saying his losses were \u201ccompensated\u201d as the company had learnt \u201cenough\u201d from the episode.

\n\nThe move now to partner Amazon seems to have stemmed from that learning.

\n\nOver the past month, the two have been trying to make joint plans, including in distribution, warehousing, and creating products for Amazon and its grocery format, Pantry. Also, Future group brands, including Big Bazaar, are being aligned with Amazon Now, which promises delivery of everyday essentials within two hours, suggest media reports.<\/p>\n\n

A more serious handicap will be Amazon controlling Future Group\u2019s data and customer relationships in the partnership. \u201cIn e-commerce, ownership of customer relationship and data, which offers consumer insights, is the real asset,\u201d points out Devangshu Dutta, CEO of Third Eyesight, a consulting firm focussed on retail and consumer products.

\n\nVianello agrees: \u201cWhen you have your own e-commerce venture, as Reliance Retail plans, you are the owner of the data and you can slice and dice it to come up with exciting product offerings and improved service experience.\u201d

\n\nThis is one of the advantages that RIL might have seen in going it alone.

\n\nGoing solo<\/b>

\n\u201cReliance Retail has taken a more integrated approach towards e-commerce,\u201d observed Dutta. \u201cThe company is set to leverage its pan-India retail presence and Reliance Jio\u2019s (RIL\u2019s telecom business) data capabilities to roll out an e-commerce platform,\u201d explained Dutta.<\/p>\n\n

The synergy between Reliance Jio and Reliance Retail is a big advantage. The retailer has about 10,000 stores across 6,500 towns in India, while Jio has a subscriber base of 306 million. After bringing many Indians online with Jio\u2019s affordable data offerings, Reliance now hopes to get most of them to start shopping online as well.

\n\nThe challenge, though, would be in getting the last-mile delivery right. \u201cReliance Retail could be at a disadvantage here compared to the Future Group, which has its delivery mechanism in place courtesy its partnership with Amazon,\u201d suggested Vianello.

\n\nMoreover, like with Jio, consumers will expect heavy discounts from Reliance\u2019s e-commerce venture as well, which may be difficult to sustain given the initial investments. \u201cBiyani\u2019s (online) launch involves lower upfront costs, while Reliance Retail\u2019s will be resource hungry since it\u2019s an almost greenfield project,\u201d pointed out Pillai, adding, \u201cReliance\u2019s challenge is the overwhelming perception about the group being a price warrior and disrupter.\u201d

\n\nSo, which strategy will triumph? Everything comes down to execution. \u201cSuccess in retail, including e-commerce, is about more and more customers choosing to transact with you repeatedly. Achieving this is a difficult and ongoing process. There are no guaranteed or permanent winners,\u201d says Dutta.<\/p>\n\n

Source: qz<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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