Indian telecoms tycoon Mukesh Ambani seeks Diwali shopping spree as he goes head to head with Amazon

Ambani’s sprawling conglomerate, Reliance Industries, is flush with cash after its shares rallied about 35 per cent this year

In India, the stakes are high: Jeff Bezos, Amazon’s founder and chief executive officer, has pledged to invest US$6.5 billion there

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Reliance Industries chairman Mukesh Ambani. Photo: AFP

Published: 3:30pm, 11 Nov 2020Updated: 4:07pm, 11 Nov 2020

Billionaire Mukesh Ambani obliterated rivals in India’s telecommunications sector by selling US$2 data plans and free voice calls. Four years later, he’s deploying a very similar tactic – cutthroat pricing – to gain an edge in the country’s increasingly competitive e-commerce space.

As India this week hits the peak of its biggest shopping season, the festival of Diwali, the tycoon’s retail websites – including JioMart – are elbowing their way into a space long dominated by Amazon.com and Walmart’s local unit Flipkart Online Services.

Ratcheting up competition, Ambani’s portals are offering blockbuster discounts of as much as 50 per cent on popular sugary confections and other holiday staples like spice mixes for India’s rice delicacy, biryani. Meanwhile, his Reliance Digital website is selling some flagship Samsung smartphones at prices cheaper than rivals, with as much as 40 per cent rebates.

It’s a push that comes as Ambani’s sprawling conglomerate, Reliance Industries, is flush with cash and has seen its shares rally about 35 per cent this year. After raising an eye-popping US$20 billion for its technology venture, it’s shifted fundraising to its retail arm, which has won over US$6 billion in investment in recent weeks from heavyweights like KKR & Co. and Silver Lake. Already India’s biggest bricks-and-mortar retailer, Ambani’s online ambitions pit him against the two US giants, both of which have invested big in India.

The country, one of the last big consumer markets, is still up for grabs, and Morgan Stanley estimates that India will generate US$200 billion in e-commerce sales by 2026. Yet, the billionaire’s triumphs in telecommunications – where he started as a tiny player, but outpaced established rivals by undercutting them on price and capitalising on regulatory changes – are a cautionary tale for the American giants.

In retail, Ambani’s firm has a huge edge: Government policies are increasingly stacked in favour of domestic retailers, of which Reliance is the largest. Since the end of 2018, India’s foreign investment rules have also barred Amazon and Walmart’s local unit Flipkart from featuring exclusive products and owning inventory, in a bid to restrict their ability to directly influence prices and offer discounts. International companies aren’t allowed to own more than 51 per cent of local brick and mortar supermarket chains. Even that limit is subject to conditions such as setting up only in cities with populations of less than 1 million.

With his local strategy, low-cost procurement and chain of bricks-and-mortar stores, Ambani has the ability to shake up online retail, said Siju Narayan, Chief Experience Officer, RexEmptor Consult LLP in Mumbai. “JioMart can dent the fortunes of grocery e-commerce majors like Bigbasket & Grofers,” he said, referring to the country’s biggest online grocers. “And impact the grocery, home & personal care category of e-tail majors like Amazon and Flipkart in coming days.”

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