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  • Writer's pictureGalactic Advisors

Reliance’s Chakravyuh: An All-Out Business War on Multiple Fronts

Author: Deepak Mehta

The Indian D-Street is abuzz with talks about India’s largest business behemoth acquiring what probably was India’s first supermarket. Reliance Industries is speculated to be in the last stages of discussions to acquire Big Bazaar.

With that, Reliance will solidify itself in offline retail. The acquisition of Big Bazaar will boost Reliance Retail’s revenues by 15% and set it far ahead of the rest of the competition. (Reliance Retail clocked INR 1.3 trillion in 2019, Future Group revenue of INR 200 billion were primarily due to Big Bazaar.)

This acquisition is just the latest in a long list of ventures that Reliance Industries has embarked on in the recent past in an attempt to diversify.

Just a few days ago, they launched Jio Meet, a video conferencing app. Considering the ongoing COVID situation and the way it is going to fundamentally change the business landscape, this is a near-perfect move. Despite the people saying it is a blatant case of plagiarism, it already has more than a million installs on Google play, riding high on the wave of nationalism rampant in the country, and the strong government push for “atmanirbharta” (“self-reliance”; coincident much?).

Jio, the digital venture of Reliance, has frankly been a game-changer for them. Replete with their own apps for a wide variety of entertainment needs (music, video games, streaming, movie-on-demand) and the broadband and cellular services, it has now created a tight ecosystem of everything the average Indian digital consumer needs on one platform.

No wonder, Reliance Jio alone is now worth $65 billion, making it bigger than all but the top 3 private Indian firms (Reliance, TCS, HDFC) including the likes of household names like HCL, Bajaj, ICICI, Wipro, Airtel, SBI, etc.

With the aggressive expansion and acquisition spree, Reliance now is firmly entrenched across fields.

Six months ago, Finshots posted an infographic titled Amazon is at war with everyone. It quickly became viral across Twitter, LinkedIn, and Reddit, propelling the then small publication into the mainstream. But right now is the right time to update the same as one of the world’s biggest corporations faces its toughest challenge yet in India.

Technically, Amazon and Reliance operate in very different industries — the former is an online store and delivery service and the latter is best known for the oil refinery business. However, over the years Amazon has diversified into multiple ventures, both adjacent and seemingly disconnected through means organic and inorganic.

One of their very first acquisitions was that of IMDB, the premier movie database, back in 1998.

They did not lose focus of their roots, acquiring multiple book-related businesses — Booksurge (printing) in 2005, Audible (audiobooks) in 2008, Goodreads (leading book review, recommendation engine, and social media) in 2013, and ComiXology (online comics portal) in 2014.

Amazon ventured into gaming by buying the leading game streaming portal, Twitch, back in 2014, for close to a whopping billion dollars, followed by Curse (gaming social media) in 2015.

The Whole Foods acquisition in 2017 made waves because of the insane $13.7 bn. Then came home security systems with the acquisition Blink (security cameras) in 2017 and Ring (video doorbells) in 2018.

And of course, they have their own eBook reader (Kindle), smart speakers (Echo/Alexa), payment solution (Amazon Pay), video streaming (Prime Video), and music streaming service (Prime Music).

The story of Reliance Industries, spearheaded by the astute business professional and India’s richest man, Mukesh Ambani, is no different. Over the last few years, and especially after the launch of their digital venture, Jio in 2015.

Since then, there has been no looking back for Ambani. Jio has diversified into mobile wallet through Jio Money in 2016, broadband services through Jio Fiber in 2019, music streaming through the acquisition of Saavn in 2018, Jio Meet (a competitor to Zoom) a couple of weeks back, and a revamped version of Jio Chat (a competitor to WhatApp) just yesterday. They also have their own browser (Jio Browser) and their streaming service (Jio TV).

Let’s focus first on the commonalities between the two and stack them up to see who’s winning (at the moment).

(A) Video Streaming

A comparative analysis of the Indian streaming market back in 2019 revealed that neither Netflix nor Prime Video was the leader. Prime Video had 10% market share (ranked #3), compared to Jio TV’s 23 % (#2) and Hotstar’s 29% (#1, another Indian homegrown streaming service).

(B) Music Streaming

Same story, different players. The leaders are all domicile players — Gaana (30% market share), and JioSaavn (24%). Global players Wynk and Spotify make up 15% each, Google Play Music another 10%, and Amazon Music (despite coming free with the Prime subscription) makes up less than 7%.

(C) Retail (offline and online)

While Amazon is only present in online retail, Reliance has its foot in both online (through Jiomart) and offline (Reliance Retail, including Reliance Fresh).

Reliance Retail saw a spectacular 145% increase in revenue in 2019, clocking in INR 1.3 trillion, while Amazon India saw just over INR 12 billion in turnover (less than 10%) during the same time period.

The winner is clear.

The Indian business tycoon squarely beats the world’s richest man on his home turf.And it is not just Amazon that is feeling the heat.

Jio has already put multiple Telecom giants out of business in India. And the ones that remain, Bharti Airtel and Vodafone Idea (the latter being a merger of what were two of India’s leading operators a decade ago), live in a state of perpetual nightmarish anxiety.

The same is the case with broadband connectivity, where Jio commands the lion’s share of the market (51%).

It dominates the offline retail market. And now has ventured into online grocery sales through Jio Mart, adding to the woes of Big Basket, Grofers, and Amazon Pantry.

Reliance truly is fighting battles on every front, and on most, it is winning.


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