Indian Economy News

US$ 150 billion e-commerce market: Reliance will lead owing to a strong combination of retail, telecom, and digital media

Reliance, owned by billionaire Mr. Mukesh Ambani, is better positioned than Amazon and Walmart in the US$ 150 billion Indian e-commerce market because it has the largest retail store network, the most powerful telecom operations, and a strong digital media presence.

According to a new report by Bernstein Research, India is evolving into a three-player market with Amazon, Walmart, and Reliance. It further mentioned that the conventional retail business model starts out either offline (Walmart) or online (Amazon). While considering the distribution challenges and India’s propensity to “skip a generation’ in most technologies. The Indian e-commerce market will be different with an integrated model (offline, online, and prime), strong distribution capability and superior cost advantage will be required from the beginning. It also mentioned that the largest digital ecosystem in India is being developed by Reliance Industries. Its retail arm has 18,300 outlets in India (with US$ 30 billion in sales), its telecom arm Jio has 430 million mobile subscribers, and its digital mix is expanding by 17-18% (with US$ 6 billion in e-commerce).

Over 400,000 people work for Reliance in its retail division. Since January of this year, it has employed over 69,000 new workers to replenish the workforce (approximately 66,500 workers left the company).

India is one of the few large untapped e-commerce markets. By 2025, the market is anticipated to reach US$ 150 billion, with online penetration predicted to double in that time. With around a 60% market share, Flipkart (gross merchandise value (GMV), of US$ 23 billion) and Amazon (GMV, of US$ 18-20 billion), are the market leaders in terms of scale. With e-commerce sales of US$ 5.7 billion, Reliance is ranked third, owing to the popular fashion (Ajio) and grocery (JioMart) sectors.

All three significant players are focussing on getting big (scalability), getting close (customer loyalty) and getting fit (profitability).

Despite significant slowdowns, the Indian economy remains one of the top hubs for growth. Spending on consumption is increasing. By 2025, there will be 50 million affluent households, up from 24 million in 2016 with an annual income of over US$ 15,000. India is an extremely appealing market due to the high proportion of wealthy households.

Additionally, India has the greatest per capita mobile data consumption (8 GB per month) and one of the lowest 4G data prices in the world (US$ 0.25 per GB). India is the country with the second-largest user base for the digital economy behind China, with 530 million people overall having internet access. The number of internet users in India is expected to grow to 1 billion by 2025 with 33% of them (330 million) becoming online shoppers.

According to reports, this has been anticipated by Reliance Industries (RIL). Since 2015, RIL has strategically acquired companies to build Reliance Retail into a countrywide chain of 18,000+ stores with a GMV of US$ 30 billion, Reliance Jio into a leading 4G network with 430 million members, and OTT/ IPL into a powerful digital media platform with music streaming, news, and sports.

As a result, RIL is the only Indian operator with an integrated (offline + online + prime) offering and the capacity to compete with major international IT companies (Amazon, Walmart).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.