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Reliance to Enter the e-commerce Industry: Report

Reliance is looking at toppling Amazon and Walmart-Flipkart from their top positions. Paytm Mall is just a small competitor in comparison

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In this photograph taken on June 6, 2013 Reliance Industries Chairman Mukesh Ambani poses as he arrives for the company's annual general meeting in Mumbai. India's 100 richest people are for the first time all billionaires, according to an annual Forbes survey released September 25, 2014, with the country's top earners worth a third more combined than last year. Industrialist Mukesh Ambani topped the list for an eighth straight year with a 23.6-billion dollar fortune, Forbes India said on its website. AFP PHOTO/Indranil MUKHERJEE/FILES

When Paytm Mall started, it took a cue from its investor Alibaba and aimed to become a digital universe for everything.

As part of its initial offers, the company started giving cashback to attract customers.

According to Pavel Naiya, Senior Analyst, Devices and Ecosystem at Counterpoint Research, it was a short-term strategy and gaining royalty in the long-term in a price-sensitive market like India was an uphill task which depends on multiple factors, including service delivery, exclusive offerings and additional product bundling, etc.

“As cashback disappeared, so did the customers,” said Naiya.

Paytm Mall stopped fighting the low-margin, high cash burn e-commerce battle, and began altering its strategy to become an O2O (online to offline) platform for small sellers.

The announcement by Reliance to enter the fray was really worrisome for Paytm and its owners.

“Reliance is working on creating the world’s largest online-to-offline New Commerce Platform,” said Mukesh Ambani, Chairman and Managing Director, Reliance Industries said at the “Make in Odisha Conclave” in November last year.

With a deep footprint in over 10,000 Reliance Retail outlets pan-India, Reliance has a definite edge over all other retails players out there.

Reliance
Reliance.

Reliance has capital, an unending capacity to scale up, massive retail footprint and resources to beat the competition. Mukesh Ambani aims to become the top retail player in the country and can easily do that like he has done with Reliance Jio,” Satish Meena, senior forecast analyst at Forrester Research, told IANS.

One thing that has always worked in Reliance’s favour is their deep discounting strategy and this will be the key differentiator with their ecommerce platform too.

“Paytm Mall faltered owing to adopting a wrong model. It is looking at a very difficult time ahead as unlike China, India is yet to mature for the online-to-offline (O2O) marketplace,” Meena said.

Thomas George, Senior Vice President and Head of CyberMedia Research (CMR) went a step further.

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“I will not be surprised if Paytm could be an acquisition target for Reliance or Alibaba to pursue their India e-commerce business opportunity,” George told IANS.

Alibaba never saw long-term growth in the e-commerce sector in India so they placed their bet on the burgeoning digital payments sector which, according to Google and Boston Consulting Group, will be worth $500 billion by 2020.

Paytm Founder and CEO Vijay Shekhar Sharma thought otherwise and the result is for everyone to see.

“Reliance is looking at toppling Amazon and Walmart-Flipkart from their top positions. Paytm Mall is just a small competitor in comparison,” said Meena. (IANS)

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Sellers Independently Set Their Prices on Our Platform and We Don’t Interfere: Amazon India

Amazon has more than 50 fulfillment centres in the country and provides several other facilities to the sellers

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Amazon
Amazon has the largest storage space -- 260 million cubic space available for any seller to use. Sellers continue to use Amazon's facilities so that they do not have to do the operational logistics to ship the product. VOA

Discarding allegations of deep discounting and predatory pricing, a top Amazon India executive on Monday asserted that sellers set their prices independently and the platform follows government rules very carefully in the country.

“Amazon is a 100 per cent pure marketplace in India. Sellers set the prices on their own. We do not interfere there at all,” Gopal Pillai, Vice President, Seller Services, Amazon India, told IANS in an interview.

“We have provided the tools and system needed for sellers to manage their business in an effective way,” he added.

The assertions come at a time when the Confederation of All India Traders (CAIT) has approached the government for its intervention regarding the “deep” discounts offered by e-commerce majors like Amazon and Flipkart during festival sales.

CAIT alleged that the two e-commerce majors flouted the norms for the foreign direct investment (FDI) by carrying out festival sales.

Following the complaints, the Department for Promotion of Industry and Internal Trade (DPIIT) sent questionnaire to Amazon and Flipkart over their adherence to the FDI norms. The responses sent by the e-commerce players are reportedly under examination by DPIIT.

“We follow government rules very carefully. We have been compliant… so we do not see anything to discuss there because we take compliance very seriously,” Pillai said.

“We started with 100 sellers six years ago. Today, we have more than 5.5 lakh sellers in India. Businesses continue to grow across the board,” he noted.

Amazon
Discarding allegations of deep discounting and predatory pricing, a top Amazon India executive on Monday asserted that sellers set their prices independently and the platform follows government rules very carefully in the country. Pixabay

In 2019, Amazon India launched close to 1.6 lakh sellers.

“This year alone, we were able to produce more than 18,000 millionaires and 3,500 crorepatis in the country,” Pillai informed.

Amazon India on Monday also announced that it would organise the second edition of its “Small Business Day” on December 14.

The event will offer customers the opportunity to discover and purchase unique and hard-to-find products from start-ups, women entrepreneurs, artisans and weavers under its various programmes such as Amazon Launchpad, Amazon Saheli, Amazon Karigar as well as enjoy other deals and offers extended by lakhs of SMBs and MSMEs .

“Amazon Karigar as a programme has more than 8 lakh artisans and weavers. Amazon Saheli has 30 partners and more than 2 lakh women entrepreneurs participating in it. Amazon Launchpad has more than 900 brands with more than 200 brands being crorepati sellers,” Pillai said.

Amazon India said it will organise e-commerce awareness workshops in five different clusters in the country in partnership with the Confederation of Indian Industry (CII). These workshops will guide how small and medium sellers can get online, what are steps to follow, etc.

“We are the largest marketplace in the country and we have been having more sellers and more selections consistently. We make sure that our experience on mobile is good, our website experience is seamless and we also focus on vernacular experience so that we can have sellers coming from every part of the country,” he elaborated.

Amazon has more than 50 fulfillment centres in the country and provides several other facilities to the sellers.

Amazon
Amazon India said it will organise e-commerce awareness workshops in five different clusters in the country in partnership with the Confederation of Indian Industry (CII). These workshops will guide how small and medium sellers can get online, what are steps to follow, etc. Pixabay

“We have the largest storage space — 260 million cubic space available for any seller to use. They continue to use our facilities so that they do not have to do the operational logistics to ship the product. Our backhouse can do it.

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“Similarly, we also have service provider network where we have 700 service providers across 100 cities and they continue to provide services in imaging cataloging and everything else. We have a lending marketplace through which sellers can get loan from Rs 50,000-Rs 5 crore with a very competitive interest rate,” Pillai said. (IANS)