Retail

Reliance Retail Fires Shot Against Amazon In Battle For India

Reliance Fires Against Amazon In India Battle

There’s a storm brewing in the Indian retail scene, with Amazon at its center.

Over the weekend, Reliance Industries – the company owned by India’s richest man, Mukesh Ambani – purchased Future Group’s 2,000 retail stores and the Big Bazaar grocery chain. Reliance, which is already referred to as the “Amazon of India,” owns and operates more than 10,000 stores across categories including supermarkets, consumer electronics, apparel and other various segments, and also owns several eCommerce sites.

Reliance’s purchase of Future Group is similar to Amazon’s acquisition of Whole Foods, but at a much bigger scale. Whole Foods has 497 stores. Ambani’s latest purchase shows his aggressive strategy, as he competes with Jeff Bezos for the lion’s share of retailing in a country populated by 1.3 billion consumers.

“At a time like this, the valuation of a lot of retail organizations is really attractive, and Reliance is in an enviable position with a huge war chest," said Pronam Chatterjee, co-founder and chief executive officer of BluePi Consulting, as reported by Reuters. “In the next five years, we see one retail organization taking up the pole position. With these acquisitions, Reliance is priming to be the clear leader."

Expect Amazon to compete aggressively as Reliance takes its cut of the market, and as India’s biggest conglomerate, Tata Industries, launches its bid to create an Amazon-like marketplace on the subcontinent. Amazon has just wrapped its second annual Prime Day in India and recently launched an online pharmacy service, which is currently being tested in the south Indian city of Bengaluru.

But it will need to hustle to match Reliance, which is on an acquisition spree and actively courting investors to expand as quickly as possible. In November of 2019, it rolled out JioMart, an eCommerce channel for Reliance Retail’s grocery outlets. JioMart launched with a WhatsApp order booking service, which allows customers to place orders via the instant messaging app and gives JioMart access to What’s App’s database of over 400 million consumers.

More recently, Reliance Industries bought a 15 percent stake in online lingerie retailer Zivame, and paid for a majority stake in online pharmacy Netmeds. The company is reportedly also in talks to buy stakes in other online retailers, such as furniture seller Urban Ladder and grocery delivery app Milkbasket.

Amazon could also be restrained in India by an antitrust suit filed in the country last week. A group of more than 2,000 online sellers in the suit claim that Amazon gives favorable treatment to some retailers whose online discounts threaten to drive independent vendors out of business. According to Reuters, the All India Online Vendors Association, which sells on Amazon and Flipkart, alleges that Amazon India’s wholesale arm buys goods in bulk from manufacturers and sells them at a loss to sellers such as Cloudtail. Such sellers then offer goods on Amazon.in at big discounts.

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