6 mins read . 26 May 2023
India’s e-commerce space is led from the front by the two moguls, Flipkart, and Amazon with a mammoth 60% market share in the ecosystem. The e-commerce space itself is expected to reach a market value of $150 billion by 2025, with the doubling of online penetration expected to occur in the next five years. Currently, Flipkart (owned by Walmart) boasts a $23 billion gross merchandise value (GMV) followed by Amazon, with a $20 billion GMV.
The e-commerce sector witnessed huge upsurges over the years in a market that quintessentially belonged to brick-and-mortar retail, by touching every nook and cranny not reached by physical retail. Overarching digital payment ecosystems and a pandemic boost have all anchored the growth acceleration of this sector. Amazon India and Walmart-owned Flipkart are currently locking horns for supremacy. While Flipkart diversified its business with strong footholds in fashion (Myntra), pharmaceuticals (Health+), tourism (Cleartrip), Amazon has variegated its portfolio through Amazon Music, Prime Video and Amazon Pay.
A recent report by analytics firm, Bernstein Research, has now projected that Reliance Retail-Jio is best positioned to register its position as the dominant player in the e-commerce market. Currently, Reliance holds the third spot in e-commerce market share sweepstakes, with an estimated $5.7 billion in e-commerce sales or GMV; mainly driven by Ajio (fashion) and JioMart (grocery).
Reliance Industries Limited (RIL) has been articulating the building of India’s largest digital ecosystem for a long time. Since 2015, their resume has been nothing sort of impressive, with Reliance Retail being converted into an 18,000-plus store nationwide chain with GMV of $30 billion. In this journey, the big thrust has come from the incomparable 4G Jio network with over 400 million active subscribers. This has enabled a synergized digital media presence too, via Jio Cinema (IPL streaming), Jio Saavn etc.
Such a disruptive digital playbook is set to integrate offline and online businesses into one seamless chain model. Obviously, the top brass at Amazon and Walmart must have already put on their thinking caps to design a befitting response. Reliance also stitched partnerships with Meta in 2020, when Meta invested $5.7 billion into Jio Platforms. Given the rapid shift in paradigm to digitization and Reliance’s incessant efforts in developing a state-of-the-art and versatile digital ecosystem, Reliance’s coronation at the apex of the e-commerce pyramid is starting to look a lot more realistic.
One of the key factors which companies should look out is to best amalgamate AI into their operations. From a psychological standpoint, customers have a much higher sense of entitlement than ever before, and if e-commerce platforms give customers a “that’s me” messaging which resonates with them, they can bag in even greater numbers. So, AI could be a key differentiating factor and the big 3, with their deep pockets, are already at it.
It is often more profitable for companies to pander to their loyal customer base, rather than scouring great lengths to attract new customers. More so, considering the high cost of customer acquisition in India. E-commerce platforms should figure out what is unique about their top 20% of customers, and they will in turn find more happiness and financial freedom in doing their best work for customers who love it.
Lastly, as the adage goes, with great power comes great responsibility. Consumers are more conscious than ever about the impact that their actions have on the environment and society, and therefore sustainable and ethical shopping practices are being encouraged. Companies that focus on channelizing these practices will see greater market valuation since there are various incentives provided by government bodies to those who serve to protect their environment. But Reliance has blown the e-commerce battle bugle. The big 3 surely have deep pockets, but Reliance also owns the ecosystem to boot, something Amazon and Flipkart cannot lay claim to.
Content Source: Live Mint