India’s Reliance Industries is set to take on Amazon and Flipkart with a new ecommerce platform aimed at small retailers, its chairman Mukesh Ambani announced on Friday, as he hit out at “data colonisation” by foreign companies.
Speaking at an investment conference in the state of Gujarat, Mr Ambani said that the group would launch a “new commerce platform”, a partnership between its Reliance Retail subsidiary and telecom unit Jio.
While he did not provide full details of the venture, Mr Ambani said it would be launched first in Gujarat, and would “empower and enrich our 1.2m small retailers and shopkeepers” in the state.
Gujarat is the home state of both Reliance’s founder, Mr Ambani’s father Dhirubhai, and of Indian prime minister Narendra Modi, who was previously the state’s chief minister.
Speculation has been swirling in recent weeks about a Reliance digital marketplace that would enable small merchants to sell online, putting it into competition with Amazon and Flipkart, the dominant ecommerce sites in India.
The announcement comes as Amazon and Flipkart — acquired last year by Walmart for $16bn, in India’s largest foreign direct investment — lobby frantically against new regulations that they say would severely disrupt their business. Reliance took part last year in government consultations preceding the new guidance, to which Amazon and Flipkart were not invited.
The new rules will upend the model pursued by Amazon and Flipkart: both companies own wholesale entities that provide goods to merchants, who in turn sell the products on their marketplaces. From the end of this month, no seller on a foreign-funded marketplace will be allowed to source more than 25 per cent of its goods from a company affiliated with the marketplace.
These restrictions will not apply to any new marketplace created by Reliance because it is an Indian company, noted Satish Meena, an analyst at Forrester Research. Being able to control the supply of goods that are sold on its marketplace “will certainly benefit them”, he said, while adding that the company could find it difficult to match the customer satisfaction levels achieved by Amazon and Flipkart. Reliance’s established focus has been on oil products, which still provide the overwhelming majority of its sales.
In results published after the market closed on Thursday, Reliance reported net profit of Rs103bn ($1.4bn) for the final quarter of 2018 — up 8.8 per cent year-on-year, driven by higher oil prices. Revenue at Jio rose 51 per cent to Rs104bn.
Jio has amassed more than 250m subscribers by offering cheaply priced data packages on its high-speed 4G mobile network, the heart of a $30bn investment programme.
In his speech, Mr Ambani weighed in on the Indian government’s controversial push for data “localisation”, which aims to block foreign technology and financial groups from processing citizens’ data offshore. Major US groups have criticised the rules, saying that it would lead to unnecessary cost increases.
“[Mahatma Gandhi] led India’s movement against political colonisation,” Mr Ambani said. “Today, we have to collectively launch a new movement against data colonisation.
“India’s data must be controlled and owned by Indian people — and not by corporates, especially global corporations …we will have to migrate the control and ownership of Indian data back to India.”
