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Bezos vs Ambani: The billionaire bout that had to happen

  (News Agencies)-The battlefor the Indian consumerwas never going tobe an all-American affair. WalmartInc.'s splashy acquisition last year of Flipkart Online Services Pvt., the homegrown e-tailer givingAmazon.com Inc. a solid run for its money, might have given the impression of a two-horse race. But as I argued(here and here),billionaire Mukesh Ambaniwasn't going to watch from the sidelines.
And last week India's richest manjumpedright into the fray.Ambani, chairman of the petrochemicals-to-telecom conglomerate Reliance Industries Ltd., has a four-legged plan to connect India's 30 million small retailers with consumers. One, neighborhood marts will be connected toReliance RetailLtd.'s footprint of almost 10,000 stores, offering themcommon inventory-management,billing and tax platformsas well as low-costpayment terminals. That will givethe expanded retailnetwork formidablesourcing power.
The second hook is Ambani's telecom business. Consumer e-commerce in India is dominated by the urban middle class.Out of the country's 500 million Internet users, almost 200 million livein rural areas where one out of four goes online less thanoncea month. No wonderthe number ofonline consumers, while growing rapidly, is expected to be only about120 million this year. Reliance Jio Infocomm Ltd. alonehas 280 million digitalsubscribers.
The ubiquity of Jio as a 4G telecom carrier, and the revolution it has unleashed in lowering data prices,means evenshops in villages and semi-rural townscan now profitably transact with less affluentcustomers by using a hybrid offline-online model.
Third, Indians are watching almost 5 billion hours of video a month on their mobile phones and fiber broadband connections with Jio. That stickiness gives Ambaniheft to promote private-label fashion, currently housed under the brand AJIO.
Finally, Ambani's ability to influence policies inhis home market shouldn'tbe underestimated. Just as Reliance getsready to push ahead, the Indian government has tweaked its e-commerce rules and made them more onerous for Amazon and Walmart-Flipkart. Until now, foreign retailers hadfound ways around a low that allowsthemto act only as pure marketplaces that don'tstock their own inventories or offer discounts. Now that the loopholes are being pluggedstarting next month, Ambani is pitching the idea that Indians' shopping data should be stored locally.
Reliance Jio's digital investments havealready exceeded$40 billion. But in India'shyper-competitive telecom market, theaverage revenue it can get from users isn'teven $2 a month. One way to make a carriage- and content-centered business spew out profits is to make it a triple play by throwing commerce into the mix, and lacing it with good, old-fashioned lobbying.
The Indian governmentis forcing Amazon CEO Jeff Bezos to competewith one hand tied behind his back. Hecould still beatAmbani, but he won't be able to avoid getting bruised
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