Ambani leads the battle with Bezos (for now)

Both became centi-billionaires (personal worth @ $100 billion). Both are looking to global domination in the future. One rules America and the other rules India. And they’ve been fighting a proxy battle over control of the Future Group

While e-commerce doesn’t claim that big a chunk of the retail pie in India, it is still the biggest bet for the future. Mergers and consolidations are already taking place. The first was global retail giant Walmart taking over Indian giant Flipkart for a perfect online-offline synergy merger. Then we had the Tatas taking over BigBasket and they have big plans and are in the process of developing a super app.

Amazon is a global biggie and apart from e-commerce is looking to have its own fleet of robots and autonomous vehicles to have a solid disaster-free supply chain network. Amazon Web Services (AWS) is a world leader in cloud services. Prime Video is part of the Streaming Big 3 along with Netflix and Disney+. If that’s not enough Amazon sits on the biggest pile of buying consumer data to exploit in the future. Jeff Bezos has a vision.

Reliance is the giant of India. Yesterday Big Retail and Big Oil ruled. Today it is the turn of Big Tech. Reliance is trying for the ultimate trifecta by ramping up all three. If yesterday it was textiles, petrochemicals, and oil, today starting with Jio, Reliance is seeing a string of acquisitions and tie-ups in the tech space. Mukesh Ambani also has a vision.

But sometimes visions clash. And it’s almost like a game of chess.

•Move 1: While the Future Group’s biggest brand names are Big Bazaar, Central, and Brand Factory, it is totally into FMCG, lifestyle supply chain, logistics, etc. A pretty diverse portfolio for anyone wanting to pick it up. That’s what happened in the second half of 2019 when Amazon said it would pick up 49% in Future Coupons which in turn at that time had a 7.3% equity in Future Retail group which Amazon had an option to buy within 3 to 10 years. It seemed like there was an Amazon-Future deal in the offing.

•Move 2: Then in late 2020 came the news that Reliance had bought Future Group’s retail for a good Rs 24K crore plus. Close to 2000 stores of various brands fell into the kitty of Reliance. Indian retail was looking to the Big 3: Walmart-Flipkart, Reliance-Future while Tata-BigBasket happened much later. It looked like Amazon India was out in the cold.

•Move 3: But Amazon struck back and took Future to court over the fact that it had an indirect stake in the group as per the above. What followed was a very long litigation game. The doors of both the High Court and Supreme Court were knocked. The case went to a Singapore arbitration court. It was a see-saw battle where the fortunes kept changing between the big two. Either way, the Reliance-Future deal was stuck.

•Move 4: But it wasn’t any of the above courts that gave a near-knockout to anyone. That came from the Competition Commission of India (CCI), which “suspended” the 2019 approval for Amazon with Future Coupons. On the face of it, it seems like a death blow as this was the whole foundation case for Amazon to stop the Reliance-Future deal. Reliance seems to have won its battle with Amazon. To make matters worse, the CCI also imposed total fines of Rs 202 crores on Amazon for failure to give “true and complete details” about the deal.

•Move 5: Amazon sued the Enforcement Directorate in the same case, accusing it of overstepping its authority and harassment. A writ petition has been filed in the Delhi High Court. Interestingly Google has also filed a plea against the CCI over a report being leaked which it has called an “unlawful disclosure” of Android smartphone agreements. Again, the Delhi HC was approached.

•Move 6: After that Amazon offered to bail out the Future Group but the latter refused due to low valuation and timeline problems. To make matters worse, Amazon suffered another setback when the Supreme Court went against an Amazon appeal in the arbitration case. Amazon currently appears to be on the back foot.

But it is still unclear who will have the last laugh as Amazon is a global company with really deep pockets. The situation may change drastically when you are finally reading this article. Meanwhile, consolidation is taking place in the combined retail/e-commerce space, we still have 4 giants: Walmart (it acquired Flipkart). Reliance (acquiring Future) with the likes of Jio Mart, Reliance Fresh, Reliance Digital, and Reliance Market. The Tatas (they acquired BigBasket) and have Westside, Croma, Landmark, and Tata Cliq. Finally, Amazon India which on its own is still a big threat.

It’s the two desis (Reliance-Tata) and two videshis (Amazon-Walmart) then which will battle it out on the two frontiers of offline retail and online e-commerce.

By Sunil Rajguru

sunilr@cybermedia.co.in