The Ambani Strategy for taking up on Amazon
They say - those who are usually silent, are the ones to watch out for.
Mukesh Ambani, the richest man in all of Asia and owner of an empire, is an example of why this saying holds true. While Amazon and Flipkart were constantly in the news, mostly because of Binny Bansal’s departure from the giant e-commerce platform, Flipkart, that he himself built, and Jeff Bezos’ rather costly divorce, one man was busy planning to monopolize the entire Indian e-commerce market in one swift move.
For the uninitiated, while speaking at the Vibrant Gujarat Summit in January, last year, Reliance Industries' chairman Mukesh Ambani, declared that his company is planning to launch a new nation-wide e-commerce platform, which would be first launched in Gujarat. Now if you think this is just another e-commerce platform in the market that will rival Amazon, Flipkart and the likes, you are completely mistaken.
By launching Jio, a network that connects more than 280 million people across the country, Ambani invested a chunk of his wealth, approximately $36 billion, in ensuring that he had a user base ready. Now that he is launching this e-commerce platform, he fully intends to rake in the revenues from selling everything from garments and groceries, electronics and financial services, to even advertising. The reason he will be able to establish his hegemony in the market, is because there will also be stricter e-commerce laws levied on foreign companies, from 2019 onwards.
You never saw this move coming, but now that it is done, you cannot stop admiring the genius of it.
The stricter rules on the foreign companies now bar Amazon and Walmart owned Flipkart Online Services Pvt. Ltd. from owning inventory, and require them to treat all vendors equally, eliminating discounts and exclusives.
This was primarily conceptualised to benefit small, local traders but surprisingly, it will only serve to benefit Ambani, and make the richest man in India, more rich. By making all other telecom companies in India obscured by offering cheap data and free calls, Ambani has definitely proved that he is willing to do anything to be the last man standing in the market. We can expect similar unbelievable deals on the e-commerce platform to attract more users to the platform.
Now what most don’t realize is the USP of this new venture is going to be its indigenuous nature. Our current Prime Minister, Narendra Modi, has been pushing the #MakeInIndia campaign for a long time now. Ambani is also branding this new venture along those lines.
At the summit he said,
"Indian data must be controlled and owned by its people and not by corporates, specially by global corporations."
Also by promising to funnel investments in Gujarat, and make it a pioneer city of this new platform, Ambani is continually maintaining his position in the PM’s good books. It’s a typical confluence of politics and capitalism where both are benefitting from one another, quid pro quo.
It is not just the online platform that would assist Ambani in establishing a retail empire, it is also the 10,000 stores nation-wide that would cater to the shopping needs of people. Reliance has silently been working towards numerous small acquisitions that would help the giant build a digital economy unlike anything that anyone has ever seen before in India.
We are heading towards a Reliance monarchy in the market that is going to be completely controlled by the Ambanis, and they aim to establish their dominance in every other industry that has a history of providing high Return on Investment. With continued political support, the Reliance group is quite invincible at the moment.