Why Amazon, Flipkart-Walmart need to worry after Reliance AGM?
Reliance Group's proposed foray into e-commerce has the potential to disrupt the sector and should be a cause of worry for Amazon and Flipkart-Walmart which dominate this space, feel experts
At the recent 41st Annual General Meeting, Mukesh Ambani, Chairman and MD, Reliance Industries Limited (RIL), made several key announcements of which one was the group's foray into the highly competitive e-commerce space, which is currently dominated by the likes of Amazon and Flipkart in India.
This announcement assumes significance for two major reasons. One, will this foray mark the establishment of an Indian e-commerce player? Two, will Reliance disrupt the Indian e-commerce space in the same way in which it has altered the telecommunications domain in the last two years with its Jio brand?
In order to look beyond the obvious in this announcement, we spoke to some experts to get their take on it.
According to Harish Bijoor, a brand expert, Reliance is bound to disrupt this space given the huge opportunity it presents. He said, “RIL is a market disruptor in literally every space it ventures into. Retail of the physical variety has not seen this so far. Therefore in comes the retail-play that everyone is excited about: e-commerce. RIL is bound to make a difference. Thus far, existing e-commerce models have only scraped the tip of the iceberg of an opportunity. RIL promises to address that. Just as existing e-commerce players are aspiring to rectify their profit margins to advantage, in comes RIL as a disruptor. What's ahead for RIL is a humongous opportunity in untapped e-commerce markets. What's even more exciting is the Jio backbone of telecom connectivity. As this widens and deepens in reach, the Jio backbone will become the lifeline of e-commerce potential for RIL.”
That e-commerce in India is a hugely untapped opportunity is evident. National e-commerce players have been overshadowed by the likes of Amazon and Flipkart-Walmart.
Speaking about the announcement, Jyoti Kumar Bansal, CEO, PHD India, said, “It is quite clear that the next big battle in the retail space is going to be fought not for shelf space but for clicks and taps. The American retail giants and the newer Chinese growing-fast giants are already trying to claim dominance in the e-tail arena, and experimenting with various models. The entry of Reliance will surely shake things up. Going by their track record of disrupting established ways of working, e-tail will likely witness seismic shifts. The ability that Reliance has to converge the telco, home and e-tail experience is at this point unique to them and that definitely is going to help write some interesting new stories. Their ability
to really build a merging future definitely places them in a position of strength, along with their width and depth of ground presence.”
For Vani Gupta, Independent Marketing Consultant and former Marketing Director Indian Snacks, PepsiCo, Reliance has established his credibility as a consumer-centric brand that delivers on its promise and this halo will carry forward to the next initiative. She explains, “Competition is good for the consumer and just as the dust settles down on the Walmart acquisition of Flipkart, this announcement is a big deal. I believe they can pull this off.”
The Indian e-commerce market, which is estimated to be around 32.7 Billion USD currently is expected to cross USD 72 Billion figure by 2020, according to market estimates by eMarketer. This presents a humongous opportunity for a big player like Reliance, which is well known for its disruptive business models.
“Reliance already has a profitable (though small) retail business, expanding offline presence, and knows the entire supply chain very well. At its scale it can definitely drive the best bargains in industry. And this will further fuel the growth of e-commerce. Amazon and Flipkart don't have scale and established offline retail presence yet. RIL will have the advantage of offline presence via Jio, especially so in smaller cities which will be the largest growth engine for e-commerce in the future. Given the crazy illogical offers RIL ran to win the telecom race who knows what tactics RIL could use to win the e-commerce game. So whatever be the case, while the Bezos and Ambanis do the flips and cartwheels, the consumer will cheer and egg the show to go on." added Gupta.
According to Varun Duggirala - Co-founder and Content Chief, The Glitch, “It was only a matter of time before Reliance went the whole hog with e-commerce. They, unlike Amazon and Flipkart, have the advantage of a widespread and growing data platform. This gives them the opportunity to get in and form an impressive base within months rather than years like the others. What is key, however, is the product range, customer ease and satisfaction which form the benchmark by which consumers return to e-commerce platforms. So while I'm sure they'll get in with a bang and initially grow faster than everyone else, what needs to be seen will be sustained growth.”
RIL entering the e-commerce business will completely change the game for India that has till now been totally sidelined by global e-commerce players but can the same be said for individual players in India? That would be interesting to watch.
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