The race to acquire a pie of the Rs 64.8 lakh crore Indian e-commerce sector is becoming hotter with two more players joining Reliance Industries and Amazon, who are currently engaged in a court battle to acquire a stake in Rs 26,000 crore debt laden Future Group. As per a Business Today report, the Walmart-Flipkart combination has acquired minority stakes in Arvind Brands and Aditya Birla Fashion Retail while Tata Group is gearing up to acquire a stake in India’s biggest online grocery retailer Big Basket.
Combined, the top three retailers have invested Rs 2.46 lakh crore in the Indian e-commerce industry. While Walmart has announced $2 billion investment; Reliance plans to spend another Rs 24,713 crore to buy Future Group's retail assets. Similarly, Amazon has pumped in $6.5 billion in the Indian e-tail landscape industry.
Acquiring more power
Each player is stocking fresh resources. While the Walmart-Flipkart combo plans to launch a $50 billion overseas IPO, Reliance Retail aims to raise more funds for future growth. On the other hand, Amazon Inc has adopted a new strategy to invest in physical stores in India. In 2018, it partnered Samara Captial to buy the Aditya Birla Group’s grocery retail ‘More’. A year earlier, it had bought a 5 per cent stake in Shoppers Stop. The Tata Group has also joined the fray with its e-commerce arm Tata Cliq planning to launch a super app to help consumers shop across its consumer-facing businesses. The company also plans to buy the Rs 6,000-crore online grocery platform Big Basket.
New business models for creating depth
Reliance acquisition of Future Retail would add Rs 26,000 crore revenue to its kitty while Amazon would have to be satisfied with just 500 More stores being added to its portfolio. Since grocery offers them more volumes and resilience, retailers like Amazon are adopting a hyperlocal business model to create depth city by city in terms of fulfillment. Rishav Jain, Senior Director and Consumer, Consumer Tech & Retail Lead, Alvarez & Marsal, expects online grocery penetration will grow incrementally over the next few years. However, tapping this opportunity will require huge investments and smart strategies, he says.
New strategies being adopted
Reliance Retail has launched a new venture JioMart which aims to onboard 15 million strong kirana stores across the country. These stores will be integrated with JioMart through its point of sales devices and their inventories will be controlled by Reliance.
Google's investment in the company will provide high quality data while its deal with Facebook gives it access to over 300 million Indian users. On their part, Amazon and Flipkart have introduced interfaces in South Indian languages also apart from Hindi. Currently, Reliance, Amazon and Walmart seem to be surging ahead in this battle. However, the Tatas too have an ace up their sleeve in the form of D’Mart, which might also plan to spread wings across the country. The battleground is surely heating up with industry getting increasingly complex.