By Aditya Kalra and Nivedita Bhattacharjee
NEW DELHI / BENGALURU (Reuters) – A $ 20 billion wave of fundraising may bring Reliance of India closer to its dream of becoming a digital giant, further threatening the ambitious plans that American companies like Amazon, Walmart and Zoom they have for India.
Sales of stakes in Reliance’s digital unit, Jio Platforms, attracted not only private equity and sovereign wealth funds, but also Google and Facebook, strong backing for a company that until a few years ago was primarily focused on oil refining. .
Some industry watchers compare Reliance’s digital plans, which range from online shopping and cloud computing to telecommunications and digital payments, with Alibaba and Tencent of China, the very companies that Reliance calls “global peers “
Reliance has a history of disrupting rival businesses. With cheap smartphones and data plans, his telecommunications company Jio has dethroned market leaders Vodafone Idea and Bharti Airtel in four years to become the largest telecommunications operator in India.
On Wednesday, billionaire President Mukesh Ambani said Reliance will expand the JioMart e-commerce platform, which connects small retailers with consumers, to offer not only groceries, but also electronic and fashion products.
“Jio Platforms not only has the back-end infrastructure and development capabilities, but also an ever-expanding captive consumer base,” said Mayank Vishnoi of Singapore-based financial advisory firm Resfeber International.
“The addition of new digital products targeting multiple industries will pose a threat to many major players in the market. Having strategic partners like Facebook and Google validates that the Reliance game plan is real.”
Recent participation sales gave Reliance a foreign partner for JioMart, which launched this year. Facebook’s WhatsApp, which regards India as its top market with over 400 million users, will work closely to connect small retailers with JioMart.
“We will cover many more cities, we will serve many more clients across India and we will expand to many more categories,” Ambani said.
When asked about the potential impact on foreign companies looking at India, a local industry executive advising American multinationals said, “Amazon and Walmart should be scared.”
Reliance will undoubtedly face stiff competition from Amazon and Walmart’s Flipkart, as both companies have deep pockets and an already established logistics and warehousing supply chain in the country.
JioMart currently delivers groceries in just 200 cities, while Amazon and Flipkart deliver a wide range of products across the country.
Walmart, Flipkart and Amazon did not immediately respond to a request for comment.
“REAL THREAT”
Reliance also has a retail presence of around 11,000 stores in 6,700 cities offering a wide range of products. It has also partnered with more than 45 major international brands, including Tiffany & Co, Burberry, and Jimmy Choo.
Flipkart’s senior leadership began to closely monitor Reliance, and there is fear that the Indian company will have an additional advantage from a regulatory perspective, two sources close to the company told Reuters.
The Ambani family is considered to be well connected politically. Amazon and Walmart have had regulatory problems and face much stricter government oversight in India, where the prime minister has been promoting self-sufficiency.
Reliance’s digital plans extend beyond e-commerce.
On Wednesday, the company said it will develop education and healthcare solutions through its JioMeet video conferencing tool that saw 5 million users within days of its launch this month. JioMeet has a design very similar to that of its rival, Zoom Video Communications, based in the United States.
Zoom said this month that it had plans for a significant investment in India. When asked about Reliance, Zoom said that it had experienced intense competition in the past but that “we know what it takes” to become a platform of choice.
“This threat is real,” said a US technology executive in India about Reliance. “As of right now, it’s not changing the game, but that vision may change in a year from now.”
(Report from Aditya Kalra and Nivedita Bhattacharjee; Additional Report from Sankalp Pharityal; Kim Coghill Edition)
