The chairman of Reliance Industries has run into a hitch in his quest to take on Amazon in India and become the biggest eCommerce company in the country, according to reports.
Mukesh Ambani, Asia’s richest man, said he will conjoin the heft of his two companies — Reliance Retail, with its upwards of 9,900 retail locations, and Reliance Jio Infocomm with its 280 million-plus telecom customer base — to power his eCommerce endeavor.
However, a Reliance executive said that data sharing between the two companies could very well hit a regulatory wall, and if there are data sharing and privacy issues that would stop the ability for the two companies to share data, then it would hurt the overall company’s ability to leverage those customers.
“They are different companies so there are data privacy rules,” Ashwin Khasgiwala, Reliance Retail’s chief financial officer, said in Mumbai. “They’re different platforms.”
Khasgiwala did not elaborate on how the company plans to move forward.
Ambani has called data the “new oil” and could potentially merge the two entities to get over the hurdle.
Abheek Singhi, head of Boston Consulting Group’s consumer practice in India, said that sharing information between “two legal entities is going to be very difficult.” He also said, “My view would be at some point in time, at least from a legal entity perspective, it will come together.”
India recently imposed new rules on foreign eCommerce companies like Amazon, which took effect in February. 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 lobbied heavily against the new regulations, arguing that it seriously harms their businesses. Reliance was a part of the government consultations leading up to the decision, while Amazon and Flipkart were not invited.