NEW DELHI: The home-grown challenger Mukesh Ambani’s fiery plan to gatecrash the online shopping industry by striking one deal at a time has kept the US interlopers - Amazon and Walmart-owned Flipkart - on their toes for months and it was about time for rivals to up the ante in the e-commerce war.
In the latest initiative, rival Amazon on Thursday said it will be investing Rs. 10 crore in aggressively ramping up India-first pilot program, ‘Local Shops on Amazon’ even as the powerful alliance between Facebook and Jio platforms - a unit of Reliance Industries Ltd (RIL) awaits regulatory approval.
“This would leverage the best of local stores and Amazon’s network. Local stores are known for fast deliveries within short distances while Amazon’s wide reach would bring more traffic to these retailers, who have good stock availability,” said Gopal Pillai, head of seller services, Amazon India. The world’s largest retailer already has on-boarded 5,000 local stores selling electronics, apparel, toys, furniture, grocery, home furnishings from metro and non-metro cities such as Bengaluru, Mumbai, Delhi, Hyderabad, Surat and Lucknow among others.
In September last year, Flipkart had on-boarded nearly 27,000 kirana shops across 700 cities to strengthen its pan-India supply chain and expand its reach in the tier 2 and tier 3 cities. "After digital payments, the next big revolution in kirana is going to be ushered in conjunction with e-commerce," Flipkart Group CEO Kalyan Krishnamurthy had said.
Reliance, on its part, however, is steadily putting meat on the bones of what he has been referring to as ‘new commerce’. On Wednesday, Both Facebook and Reliance have singled out the retail sphere as an area ripe for their $5.7 billion collaboration wherein the duo will empower three crore local shops, also called kirana shops, to digitally transact with every customer in their neighbourhood.
Last year, the company had acquired a string of online-to-offline (O2O) commerce platforms such as Fynd, hyperlocal logistics player Grab as well as a chatbot platform Haptik --- all of which fits perfectly into the game. The deals may be tiny, but they seem to be putting together the acquisitions who can then be invested in to build out larger platform products. In fact, various arms of Reliance’s retail business operate over 10,000 grocery stores across India. Of the entire consumer basket of grocery, fashion and lifestyle, and consumer electronics under Reliance Retail, “Grocery biz is expected to take centre stage in Reliance Retail’s growth narrative over FY19-22 as expansion plans for the profitable stock-up format ‘SMART are revved up," analysts at HDFC Securities said in a note.
“If the Jio deal works, Facebook can take it to other markets and compete with Amazon and Walmart in global e-commerce other than India,” Satish Meena, a senior analyst with Forrester Research said. Any preventative, protectionist action from the government against Facebook, however, will be the final straw in deciding if the current e-commerce duopoly will be finally shattered.