Reliance To Battle Amazon And Flipkart For India eCommerce

Indian company Reliance Industries plans to open an eCommerce site geared toward small retailers, one that would rival Amazon and Flipkart, Financial Times reported on Friday (Jan. 18).

When speaking at a conference about investments in Gujarat, Chairman Mukesh Ambani said he planned to launch the site in collaboration with Reliance Retail subsidiary and telecom unit Jio.

India recently imposed new rules on foreign companies like Amazon, which will take effect at the end of this month. Amazon and Flipkart – which Walmart bought last year for $16 billion – supply goods to merchants, who then sell those products on their own marketplaces. But the new regulations state that no foreign-funded marketplace can source more than 25 percent of its goods from a company associated with the marketplace.

Amazon and Flipkart have lobbied heavily against the new regulations, arguing that it would seriously harm business. Reliance was a part of the government consultations leading up to the decision, while Amazon and Flipkart were not invited.

Ambani didn’t give full details of his company’s new endeavor, but he said it would “empower and enrich our 1.2 million small retailers and shopkeepers.”

The 25 percent rule wouldn’t affect Reliance, because it’s an Indian company, and having control of the goods will be a huge benefit for it, according to Satish Meena, an analyst at Forrester Research.

However, Meena also said that Reliance might be hard-pressed to match the other companies’ level of customer satisfaction. The majority of Reliance’s sales comes from oil products.

Reliance reported a profit of Rs 103 billion ($1.4 billion) in Q4 of 2018, which is up 8.8 percent year over year, steered by increased oil prices. Revenue at Jio rose as well.

Ambani also said he supported India’s move toward data localization, which blocks foreign companies and financial organizations from processing Indians’ data offshore.

“India’s data must be controlled and owned by Indian people — and not by corporates, especially global corporations … we will have to migrate the control and ownership of Indian data back to India,” he said.