Reliance, not Walmart, is Amazon’s real rival

Mumbai: It’s time the Inc. boss took notice of his real rival in India, the only billion-strong consumer market open to Western tech firms. While Walmart Inc.’s acquisition this year of Flipkart, a homegrown e-tailer, might have given the impression that the battle for India would be an all-American contest, a new national e-commerce policy doing the rounds in New Delhi should disabuse Bezos of that notion.

If the draft policy becomes a law, the oil-to-telecom tycoon who’s India’s richest man will emerge as the most formidable challenger to the wealthiest person on the planet.

The core contest comes down to warehouses. Foreign-funded firms aren’t allowed to hold e-commerce inventory in India. That’s a disadvantage for Amazon since it prevents the firm from fully capitalizing on the strengths of its vaunted logistics operation, seen as one of its most decisive edges in the US.

Amazon was hoping that those rules would be loosened but the proposed policy instead calls for harsh controls on even the phantom sellers that Amazon and Flipkart have been using to get around the no-inventory problem. If the new policy is strictly implemented, Amazon and its preferred resellers, won’t be able to offer deep discounts.

Meanwhile, Indian-managed companies like Ambani’s Reliance Retail Ltd. will be free to control and improve their supply chains while building a fearsome online presence in partnership with his mobile operator, Reliance Jio. This new restriction will probably make it to the final law. RBI is already directing all payment firms to keep their data exclusively in the country by October.

$1 trillion: India is pegged to be a $1 tn digital economy by 2025, and Bezos, Ambani, and Bansal and Walton backing Walmart-Flipkart all want a piece of the action. Judging by this first round of regulatory skirmish, it’s the Reliance boss that Bezos needs to worry about most.

‘India First’ doctrine

  • A report in Factor Daily, an Indian tech news website, gives a detailed account of how executives from Jio and Reliance Industries Ltd., the group flagship, helped shape the “India First” doctrine of the new e-commerce rules.
  • The Reliance boss owes it to his shareholders to try to make the most of his home-field advantage. The only way his big telecom investments already amounting to $36 billion and counting will make sense if Jio can succeed in locking in India’s consumers with a triple play of carriage, content and commerce.

(With inputs from Bloomberg)