It is not a secret that Reliance, the Indian conglomerate, is looking to become a major player in the e-commerce market.
The company has been investing heavily in their e-commerce platform.
In contrast, Amazon has been dominating the market since its launch in 1994.
It is difficult to predict who will win this fight as both companies have strengths and weaknesses.
For example, Reliance can offer cheaper rates for products because of their lower operating costs but Amazon has better customer service and better return policies (but less profitable).
Amazon, on the other hand, has been competing against other big players like Walmart, Alibaba and Target to dominate the e-commerce market share.
In the recent past, India has become a major battleground for global giants like Amazon and Reliance.
The fight between these two rivals is not just limited to the online space but also includes physical retail stores.
In this post, we will be looking at the key strategies of both companies in their quest to become India’s leading retail player and ow are they solving the last mile problem in retail.
Amazon’s Strategy in India
Amazon has been a pioneer in the global e-commerce market.
It is also one of the most popular online shopping sites in India, with more than 100 million products on its site.
The company has now set up its fulfilment centres, which will help Amazon deliver products to customers more quickly.
Amazon is also focusing heavily on the inventory model where the profit margins are way more than the marketplace model.
This was the reason why Amazon entered into a strategic partnership with Cloudtail in 2014 and Appario Retail in 2017.
Reliance’s Strategy in India
The Indian retail market is expected to grow at a CAGR of 17% from 2018 to 2023. This has led many companies like Amazon and Reliance to enter the market.
The Reliance Strategy for Future Retail is transforming India into a digitally empowered society and a global economic powerhouse.
Now the company aims to become the world’s most admired retail company by leveraging its strengths in retailing.
This was the reason why Reliance Retail spent Rs. 26000 Crores to acquire Future Group.
How Did the Dispute Start?
- It all started in 2019 when Amazon acquired a 49% stake in Future Coupons (a promoter entity for the future group) for around $201 million (1500 crore INR).
- As a result, Amazon now has a 3.5% stake in Future Retail because Future Coupons holds a 7.3% stake in the same.
- However, before the deal could be executed, Amazon alleged Future Group for the breach of contract as the company said that Future Group cannot sell its business to anyone without their permission.
- But in 2020, Future Group announced a 24713 Crore INR deal with Reliance Retail for the sale of the logistics and warehousing verticals, and wholesale and retail business.
- Now Amazon took Future Retail into emergency arbitration in Singapore where they announced the results in favour of Amazon and holds the deal between Reliance and Future Retail.
- On the other hand, Indian Supreme Court has also put the deal between Reliance and Future on hold.
- Now both the parties have already approached the Permanent Bench of the SIAC and are seeking a resolution as soon as possible.
Who will win the Future Retail Case?
Well, for now, we can’t predict the future. But as the Supreme Court of India and emergency arbitration have spoken in favour of Amazon, the chances are Amazon might win this battle.
On the other hand, Kishore Biyani, the man behind the Future Group says that “Amazon is driving them to their knees, we’re broke.”
What Business Lessons We Can Learn From This Iconic Business War?
Both Amazon and Reliance are creating a very, very powerful ecosystem.
Amazon has 60+ warehouses spread across 15 states, which enables them to deliver products up to 15000 PIN codes.
And these PIN codes include all types of cities, starting from tier 1 cities to tier 4 cities.
In addition to that, Amazon has a huge amount of data about what does each customer want and what they don’t want.
Apart from that, they’ve also got the best customer support in the world.
So now the question is, while Amazon has spent eight long years in mastering this art of e-commerce in India to build a robust supply chain and customer loyalty, how is Reliance even planning to compete with Amazon in the first place?
Reliance has the power of the Supply chain
Reliance has more than 12000 micro warehouses in 7000 cities spread all across the country and these warehouses exist in the form of Reliance retail stores.
Now, this distribution chain gives Reliance three incredible superpowers over Amazon.
- Number one: Reliance can give you a two-hour delivery whereas amazon can give 1-day delivery even with Prime.
- Number two: Because of the data accuracy, Reliance has built a robust supply chain model with 9842 crores in profit.
- Number three: Reliance is more profitable than Amazon in terms of customer returns.
Fact- More than 70% of customers look for a return policy. And sellers have to pay for the return to retain customers.
How to study and Predict the Future of Retail
No matter who wins, retailers from all over the world must focus on these key takeaways in order to win the retail sector.
From a consumer point of view, focus on the
- Delivery time
From a business point of view, focus on the
- Customer retention
- Supply chain
- Government regulation
Who do you think will win the battle? And what business lessons did you take away from this post?
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