Amazon flexes muscles but Reliance holds deep war chest

Sarkaritel
By Sarkaritel October 28, 2020 07:52


New Delhi, Oct 28  The face-off between Mukesh Ambani-led Reliance Industries Ltd (RIL) and Jeff Bezos-run behemoth Amazon over the retail assets of Future Group in India has once again exposed the ambition of the so-called “gatekeeper for e-commerce” to keep the reins of a growing retail market in the country in its hands.

The legal battle in Singapore aims to stop Reliance Retail Ventures Ltd (RRVL), a subsidiary of RIL, from dominating the burgeoning retail market in India — estimated to reach $1.1-$1.3 trillion by 2025, from $0.7 trillion in 2019, growing at a compound annual growth rate (CAGR) of 9-11 per cent (according to the latest report by Boston Consulting Group and the Retailers’ Association of India).

That Amazon does not like new and direct competition to its business in any country and will do anything to somehow scuttle it, was conveyed earlier this month by the US House Judiciary Antitrust Subcommittee examining the health of competition in digital markets and the business practices of Amazon, Apple, Facebook and Google.

“Amazon’s acquisition strategy has primarily focused on purchasing its competitors and companies that operate in adjacent markets, providing access to additional valuable customer data. This strategy has effectively protected and expanded Amazon’s market power in e-commerce and helped Amazon extend that power to other markets. Over the past two decades, Amazon has acquired at least 100 companies,” the US House panel said in its 450-page report.

“Amazon has monopoly power over many small- and medium-sized businesses that do not have a viable alternative to Amazon for reaching online consumers,” the report further read.

“Amazon has engaged in extensive anticompetitive conduct in its treatment of third-party sellers. Publicly, Amazon describes third-party sellers as ‘partners’. But internal documents show that, behind closed doors, the company refers to them as ‘internal competitors’,” the US House panel report stressed.

According to industry experts, in a post-pandemic era, India’s digital economy is all set to get a significant thrust, with ecommerce becoming highly competitive.

“As India’s largest offline retail player, Reliance has a significant war chest that enables it to forge ahead to corner household spending across urban and aspirational India,” Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR, told IANS.

“To do so, Reliance is now seeking to expand aggressively with an intent to dislodge the incumbents that control close to 70 per cent of the online market, including Amazon,” he added.

Reliance Retail reacted to Amazon in a rather bold statement that it has entered into the transaction for acquisition of assets and business of Future Retail Ltd under proper legal advice and the rights and obligations are fully enforceable under Indian law.

“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” it said.

Amazon is also facing anti-trust probes in other countries along with the US.

Germany’s competition watchdog in August began a fresh investigation into whether Amazon is abusing its dominant market position in the country.

Amazon is facing a similar antitrust probe in the European Union (EU). The European Commission announced the antitrust investigation to assess whether Amazon’s use of sensitive data from independent retailers who sell on its marketplace is in breach of EU competition rules.

The battle in India, however, is different as it is not between Amazon and the government but with another behemoth, which is growing fast across the spectrum and controlling the domestic retail and online shopping space is their biggest bet.

JioMart has continuously been adding new products, features, brands and varieties each day, offering a whole new experience and extensive bouquet of choices to its customers every time they shop.

The bouquet of products now includes a wide range of personal care products, home and kitchen care products, puja needs, shoe care, baby care products and branded foods, among others.

With its smart store price promise, JioMart offers attractive prices on essentials with a minimum 5 per cent discount on all products.

Ambani said in July that JioMart is taking over 2.5 lakh daily orders from across the country and the number is rising very fast with every single day.

“The rather aggressive powerplay by Reliance is what’s pushing Amazon to explore various possibilities to slow it down, in what will definitely be an uphill battle to win in court,” Ram told IANS.

Sarkaritel
By Sarkaritel October 28, 2020 07:52