Tuesday, 8 May 2018

Amazon vs Walmart in India

The war for the future of the retail trade in the world is going to be fought in India. It has happened by default, but happen it nevertheless has. The irony hasn't struck the policymakers in India as yet - they of the medieval dinosaur disposition of still not allowing foreign companies into the retail sector in India. If that makes your head reel, then this is India, true to its form.

Globally, Walmart (the old incumbent) and Amazon ( the not so new disruptor) have been itching for a gigantic fight for a long time. In the US, Walmart dominates in store and Amazon dominates online. There it is a fight between one form of retail trade and another. Not a headlong fight. In China, which would have been the logical war zone, both have failed against domestic competition - not least because the playing field is not level (actually tilted a full 90 deg). Hence India, by default, has become the battlefield.

It actually is peculiar that India is the chosen fighting arena. This is a country where foreign firms are still not allowed to open a store in India. You need domestic partners. Every rabble rousing politician has demonstrated and agitated in the past against allowing wicked foreigners into the retail trade. Most of India's retail trade continues to be the mom and pop store. 

Amazon was the first to enter. Amazon.in is now globally second (distantly) only to Amazon.com in the Amazon universe. E Commerce is still minuscule in India but given India's size , even minuscule is big. Amazon has been pouring money into India, adopting the time tested formula from the US. Their competition was Flipkart, a local E Commerce provider. Now Walmart is acquiring Flipkart. This will now become an all out battle between the two for the online market . Right now Flipkart and Amazon.in are close in India with Flipkart being the marginal leader. With the acquisition, Walmart will now be bigger online than Amazon in at least one country.

I wonder what the other global majors are thinking about all this. Carrefour and Tesco, the old European giants, are not present here at all.  OK Tesco is , via a joint venture, but you would be hard pressed to find a store. The newer European upstarts Aldi, Lidl, et al, can't point to India on a map and so, have not come. The Chinese, notably Tmall and JD seem to be interested only in slugging it out in home territory. Alibaba is of course more global in outlook, but they are  in the B2B space. So its just the Americans wanting to fight in India.

Where is the famous Ramamritham in all this. How come none of the rabble rousers are yelling their heads off against evil Americans ? The truth is that both Ramamritham and the political worthies are old foggies. Neither know how to switch on a computer, let alone how to buy anything online. Events have overtaken these dinosaurs before they have realised what's happening. The same thing happened with the Indian IT industry a couple of decades ago. The only way to beat Ramamritham is with something he does not understand.

So now the war will begin. This blogger is salivating at the prospect. You see, he is a piddling customer of both Amazon and Flipkart. "When elephants fight, it is the grass that suffers",  goes the old saying. I beg to differ. When these two elephants fight, it will be the grass that will flourish. I am looking forward to all the lovely deals and freebies !


Anne in Salem said...

You will certainly be able to purchase a shirt for less than $50!

Government in any country is generally too bulky - or bloated - to be able to respond to rapid change. Technology in particular challenges legislatures and judiciaries, not because they are luddites (though some certainly are) but because constitutions and precedents don't address topics like online privacy and fetal viability. Alternative fuel vehicle technologies are advancing at a rate that exceeds the EPA's ability to create reasonable and attainable rules. There has to be a reason to address an issue, but by then it is often too late. The crimes, the fraud, the discrimination happened long before the issue reached the radar of any government official. By the time something is legislated, the technology is five years old and has been replaced three times with something that generates more new issues. Perhaps if we elected younger legislators?

Ramesh said...

@ Anne - Ha ha.

You may a profound observation. Governments, by design, will be slow. They are after all meant to consider a myriad of view points, debate, consult, etc etc before they act. They cannot react to rapid changes in the environment - business, political or social, although they do react faster to political changes. Add to it the complexity of understanding, and its very likely that governments can't keep pace with both technology and economics.

I wonder what the mechanism for governance can be for such rapid change. I don't know.

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