The latest news from the business sector which is attracting everyone is about the Amazon and Reliance partnership as Jeff Bezos has offered to buy 26% Reliance Industries Limited (RIL) owned by business tycoon and richest Indian Mukesh Ambani. The news is no surprise as Amazon was looking for a solution to retain its position after Walmart invested $16 Billion in its rival e-commerce company Flipkart.
Beating Flipkart is not the only motive why Jeff Bezos has expressed his desire to seek partnership with Reliance Industries. There are numerous benefits his company would get once it is associated with the top brand and the largest brick and mortar retailers of India.
Bezos’s Amazon has only offered to buy thus much stake but there are no replies from the Indian company and no one on the company’s behalf has answered the press regarding their response and has only assured to answer as and when the correct time arrives. But, they have not yet replied to the offer proposed by the former.
What has motivated Bezos to make this offer?
There are multiple reasons behind amazon and reliance partnership proposal and one of them being the increasing competition. There is no doubt Amazon is the top e-commerce company in India, but it is only the present scenario. According to analysis, Flipkart might replace Amazon by 2023 as the number of their stores and customers is getting higher with time.
Another reason why Amazon and Reliance partnership is a possibility is because of the latest revision in the FDI Rules especially in the sector of e-commerce and retail which will definitely affect companies like international companies like Amazon and Flipkart. The latest rules, however, is in favor of Indian companies like Reliance. That is the reason why Amazon is so desperate to initiate a partnership with Reliance which is the largest retail company in India.
Jeff Bezos claims that it is the best deal and is beneficial for both parties because joining hands with Amazon would increase the market for reliance as all their products and 40 other brands owned by Ambani family would get a space on the top e-commerce platform and it would definitely increase their business. His motive behind offering the space is to access the grand network of Jio telecom and could offer better services and products by merging 10600 more stores.
How is Reliance Industries looking at the proposal?
The fact that Reliance Industries Limited is in debt, and was looking forward to connecting with China’s Alibaba. The deal has not done due to some issues, and this is what has inspired Bezos to make this proposal. From the company’s side, they have not responded yet. But reporters have recorded two separate thoughts from some seniors of RIL. One of them said, it’s better to join hands with rivals when it comes to business and they are thinking about it, while another said, there is nothing to think about. They would get no extraordinary profit from the amazon and reliance partnership. There is nothing RIL do not have, or can’t acquire. The second one seems comforting as Reliance has the largest telecom network, and when it comes to bringing their products online, it’s not something they can’t do without Amazon. According to the senior, they have multiple sources to raise funds, and they do not need to sell their shares.
India is one of the fastest developing countries when it comes to the e-commerce sector. Presently, Ecommerce holds 3% of the total retail and it is supposed to cross 7% in coming years, and the e-commerce profit which was $38.5 billion in 2017, is expected to reach $200 billion by 2026. This is the reason why Amazon and Flipkart are marking these efforts to win the e-commerce race in India. Let’s wait for the future of Amazon and Reliance Partnership proposal, and guess if Amazon or Flipkart win the race, or would there be a new name we would get acquainted in the next decade.