E-Commerce

Reliance might have hit a legal wall as it prepares to launch its e-commerce business

Logo of Reliance industries

Reliance Industries is the second largest company in India in terms of revenue generated. It is only second to Indian Oil which is a government-owned entity. The Mumbai-based company is owned by Mukesh Ambani who has managed to keep his company relevant by entering different business almost every other year. He is always looking for booming markets and then enters with a lot of capital and disrupts the entire market.

Ambani has managed to make his company one of the biggest in the world. The worth of Mukesh Ambani recently crossed $54 million and he became the 8th richest man in the world. There is a reason for this and it is his desire to strike new deals and enter new markets. There are businessmen who are stuck in one business for all their life, Reliance Industries is a company which has hands in almost all of the major sectors in India. The company is poised to enter another such market which has a capacity of around $1.2 trillion by the time we hit 2021.

E-commerce market at this moment stands at $200 billion. However, it is majorly shared by companies like Amazon and Flipkart, both the companies are American, even though Flipkart was founded by an Indian duo, it is now majorly owned by Walmart. Reliance is probably the only company that can tackle the giants of the e-commerce market. The e-commerce market right now is very vulnerable due to the new FDI policy. The two giants are at their weakest and this is when Reliance should hit them.

However, the plans Mukesh Ambani put together is falling apart. That is because of the data privacy problem. The e-commerce plan of Reliance was to merge two of its entities and work in tandem. Reliance Jio Infocom Ltd and Reliance Retail Ltd are the two entities of Reliance Industries which are two separate companies. Ambani was planning to use different functionalities of two different companies to make one business.

This merging of functionalities of two different companies is not possible even after they fall under one umbrella. Technically, Reliance Retail cannot use the data of 280 million Jio users as their data is available with Reliance Jio Infocom Ltd. This is against the laws according to the new rules of data privacy.

The plan of Reliance Retail was to use 5100 Jio stores as distribution points so that the reach of the company triples as compared to Amazon and Flipkart. These 5100 stores of Jio are spread across all of India and are deeply rooted in the remotest parts of the country. The rural e-commerce market is going to boom in the next four years and is going to reach $10 billion to $12 billion. It is that market, which Reliance is trying to target.

However, it has run into a legal wall and the company might need to find a way around it to merge the functionalities of the two companies. This is because the entire plan of their e-commerce company depends on the same.

-Unmesh Phule

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