Mukesh Ambani wants to dethrone Amazon and Walmart from the Indian e-commerce space. It may not be easy
It is quite clear that Mukesh Ambani has been wanting to get into online retail for some time. A lot of the discussions around a new e-commerce policy being put together by this government can clearly be seen to be influenced by his vision. The tycoon’s comments at the Vibrant Gujarat summit about ‘data colonialisation’, which indirectly attacks foreign players in the online space from social media companies to e-commerce players, has been timed to make maximum impact. And Mukesh Ambani could well be very successful in this space given the tremendous success he has had in telecom. Reliance Jio has pretty much overnight become one of the largest players in India and has done wonders to Ambani’s reputation. From a man routinely dissed by some politicians and a person whose reputation was not necessarily the best among the public, he is now widely considered the man who brought down the prices of data. Frankly, there is little arguing with that contention. But transforming telecom and transforming retail, especially online retail, are two different things altogether. However, one stratagem that Ambani used in telecom might come in handy in online retail as well, which is going after the mass market instead of the top-end. While India is a very lopsided consumer economy with the top 25 million households contributing an outsize amount to the economy, Ambani, with Jio, clearly looked at the next hundred million big spenders, who may not be big spenders today but as the Indian economy continues to grow, this aspirational ‘middle class’ is where the big bucks are.
Or so the idea is. The ‘great’ Indian middle-class has been a fairly ephemeral beast so far, its potential held back by a lack of jobs or as some have described, enough high-paying jobs, which is evident from income tax data. However, Mukesh Ambani seems confident that this growth will come, a confidence that American investors in the Indian e-commerce space Amazon and Walmart also feel confident about. The changes in policy that appear to be driven by Reliance might, however, have an impact of driving them away. The last thing Indian consumers need is a monopoly but that is the way that Reliance has always operated. While we wish Mukesh Ambani the best in his endeavours, the government through its policies should ensure a competitive sector that is viable and thriving.
Monday, 21 January 2019 | Pioneer
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