Why Reliance Mukesh Ambani e-commerce move is nothing like Birla, Tata, Godrej past experiments


For more than a decade, India’s young e-commerce ecosystem has seen a full cycle of boom and bust in which digital companies were born from one-bedroom apartments, and then came to never-before-seen valuations to buy or fight for. stay afloat With mounting losses.

Out of the movement of the brand,This cycle, however, does not define startups alone. The multinational conglomerates of India, from Aditya Birla Group, Godrej to Reliance, and Tata, have also been part of it. The desire to participate in India’s growing e-commerce market has already burned out.

The fashion portal of Aditya Birla Abof.com and the omnichannel player Trendin.com, the grocery store of Godrej EkStop, TataCliq of Tata Group and Reliancesmart.in of Reliance and Ajio.com also failed to reach the size of the large companies of existing e-commerce. respective sectors or have closed.

“It is quite embarrassing to see how the big conglomerates behaved like school children without even thinking about exactly what they have done and spending a few rupees,” said Harminder Sahni, founder and managing director of consultancy Wazir Advisors.

Emails sent to Tata and Godrej did not get any answers, while spokesmen for Reliance and Aditya Birla Group denied commenting on the story.

One argument about the failure has been the great investment of foreigners that continues to drive electronic commerce. “Big companies failed because someone came with a lot of foreign money, making multi-brand retail sales even if it’s an online business and putting another in a mess,” said Kumar Rajagopalan, Executive Director of the Retail Association of the India.

Another point has been that large national retailers like Reliance can not show losses over a long period unlike Amazon or Flipkart. “The Indian law will not even allow our local retailers to be on the list in case of such losses,” Kumar said.

However, as we see the next phase of growth of the post-Flipkart agreement in the e-commerce market, it is the head of Reliance Industries, Mukesh Ambani, who wants to become an option for customers, beyond Amazon, Jeff Bezos, and Flipkart, owned by Walmart. But, after all, is the commitment to the latest e-commerce of Asia’s richest man and Indian business mogul Ambani paying off?

“Whether Reliance is successful or not is like looking at a crystal ball,” Kumar said. The question is still about the government’s ability to support Indian companies. “Often the rules are created in a way that does not give importance to Indian companies.” Alibaba in China and Walmart or Amazon in the United States have made big thanks to government support, “he said.

However, for market experts, the answer to the question of whether Reliance is going big in its e-commerce game is yes, but with cautious optimism.

The new third front.

Of course, Reliance has the foundations laid down in the form of nearly 300 million customers using its Jio service along with 10,000 retail outlets in more than 6,500 cities in India. In fact, it has an entire ecosystem, just like Amazon.

“Reliance has an entertainment ecosystem, financial services, payment gateway, etc. Once you have customers connected to these services, it’s a matter of time before you can also start offering merchandise,” said Arvind Singhal, president and CEO. of Director of the retail consultancy Technopak.

Also, unlike Amazon or Walmart, Reliance has no restrictions on FDI restrictions in electronic commerce. This could give you a regulatory advantage over existing large e-commerce businesses.

There is another controversial factor that affects new companies in all sizes: profitability, which Ambani undoubtedly does not need to worry about. Reliance Industries reported a consolidated net profit of Rs 9,459 crore in the quarter ended June of last year.

“The retail sector operates between 3-5% of the profit and Reliance has been able to maintain that profit. No one would have thought that he would achieve something like Jio, “said Naresh T Raisinghani, CEO and Managing Director of the global consulting division BMGI of India.

However, beyond capital and infrastructure, would Reliance have to work in the change of mentality, towards the burning of cash and the deferred profitability? The experts, however, do not agree.

“If having a profit mentality is a problem, then why did Walmart buy Flipkart, which has been profitable for the past 40 years? Jio made profits only in the last three quarters after having lost