Amazon CEO’s Many Battles in India: Vendors, Government & Ambani

Amazon will find it very tough to take on the Jio juggernaut because of Indian government’s policies.

Updated17 Jan 2020, 07:22 AM IST
Opinion
5 min read

I got two WhatsApp messages this morning, from a friend who is a big fan of PM Modi. One was a forward which asked people to rise up against the evil economic terrorist Jeff Bezos of Amazon. The second was a viral video of the same Bezos predicting that the 21st century is going to be an “Indian Century.” I suspect, he sent me the second video as a counter to my messages about the terrible state of the Indian economy. Bezos’ statement tickled his nationalist vanity and validated his own sense of the momentous greatness of Modinomics.

So, how is it that two contradictory messages could have come out of the same ecosystem? It is a reflection of the complex battle that is going on in the multi-billion-dollar world of Indian retail, between global e-commerce giants, Indian e-commerce companies and the brick & mortar shop owners. And, the war will be won by whoever has the Modi government on its side.

Amazon CEO’s Brand Building Through Optics

As of now, Jeff Bezos has a very tough task. Even as he flew into Delhi, earlier this week, he knew his landing would be turbulent. India’s fair-trade watchdog, the Competition Commission of India (CCI) has recently begun a probe into charges that Amazon doesn’t give a level playing field to all sellers. There are protests being held across India by traders asking Bezos to go back. Many of the protestors are closely tied to the ruling party and it doesn’t help that no one from the government was willing to meet him.

On top of that, the company has to fight an anti-Amazon ‘nationalist’ narrative that is being fueled by domestic retailers. The Amazon founder is at the receiving end of propaganda by ‘political Hindutva’ bodies. He owns the newspaper Washington Post, which Hindutva groups consider to be ‘anti-India’ and ‘anti-Hindu’. In fact, BJP's foreign cell head, Vijay Chauthiawale, put out a tweet that hinted that Bezos should answer for what the Washington Post,  writes about the Modi regime. Chauthiawale wrote, “Mr @JeffBezos, please tell this to your employees in Washington DC. Otherwise your charm offensive is likely to be waste of time and money”

Jeff Bezos was prepared for this.

His visit itself is aimed at getting the optics right. One key allegation against Amazon is that it will kill India’s small businesses by flooding Indian homes with cheap Chinese products, made doubly affordable thanks to Amazon’s deep discounts.
Jeff Bezos at Mahatma Gandhi’s samadhi at Rajghat. 
Jeff Bezos at Mahatma Gandhi’s samadhi at Rajghat. 
(Photo Courtesy: Twitter screenshot)

So, Amazon has organised an SME conference, SMBhav, and Bezos is here to inaugurate it and show that he takes it seriously.

The various photo ops are carefully choreographed. The visit to Mahatma Gandhi’s samadhi, the blue ikat Nehru Jacket and flying kites with kids on Makar Sankranti, are all meant to project Bezos as an Indophile. It is tailored to counter the narrative that he is an “economic invader”, to make Amazon look less like a contemporary avatar of East India Company.

Along with that, is the announcement Bezos made, of spending $1 billion on digitizing small business in India and giving a $5 billion boost to Make in India over the next 5 years. All this is custom-made to make the Modi regime look good, at a time when it is being panned for its poor performance on the economic front. Never mind the fact that $5 billion would amount to less than 0.5% of India’s cumulative merchandise exports till 2025.

But the announcement didn't make any difference. Instead, it was met with a direct snub by India's Commerce Minister Piyush Goyal, who said that the only reason Amazon was planning to invest this money, is to cover the huge losses it was making due to the deep discounts it offers. "It is not as if they are doing a favour to India," Mr Goyal said.

Who is Afraid of Jeff Bezos?

The government has already tilted policy away from the American e-commerce giants. They have been told they cannot stock products and sell them on their own. They can only act as marketplaces for Indian vendors. In fact, when the rules were changed in February last year, analysts estimated that it would set Amazon & Walmart-owned Flipkart back by Rs.10,000-12,000 crore in 2019-20 alone. But, that doesn’t seem to have happened.

Critics allege that Amazon’s scheme of promoting some vendors as ‘Amazon fulfilled’, skews the marketplace, and stops ordinary vendors from competing with companies that Amazon backs. Brick & mortar retailers, already suffering because of the economic slowdown, are unable to compete against Amazon & Flipkart’s deep discounts. This is especially true for electronics, clothes, personal care items & books, which together account for over 85% of all online sales.

Small vendors & traders have always been a crucial support-base for the BJP. Demonetisation & GST has already tested their loyalty. Any move to make lives better for big e-commerce players could cost the ruling party some crucial votes and funds. This is especially true with the Delhi elections just a month away, where the BJP will have a tough fight in its effort to win the state from Kejriwal.

Real Battle Between Mukesh Ambani and Amazon

The real battle, however, is between Jeff Bezos, the world’s richest man, and India’s richest man, Mukesh Ambani. Analysts say that the new e-commerce rules that allow Indian-owned companies to stock inventory and act as market-places will help Ambani’s Reliance Retail & Jio.

 File image of Mukesh Ambani, Chairman of Reliance Industries Ltd. 
File image of Mukesh Ambani, Chairman of Reliance Industries Ltd. 
(Photo: The Quint)

Reliance has launched Jio Mart as an online bridge between the local grocery store and the consumer. It will create a network of brick & mortar stores who will be connected through the Jio Mart app for quick free home delivery of over 50,000 grocery products. The app which will come bundled with Jio for its 400 million users, will offer special discounts to those who register early.

Bezos and Amazon realise that this could be a gamechanger that could hurt its expansion plans in India. On top of that, the company has to fight an anti-Amazon ‘nationalist’ narrative that is being fueled by domestic retailers. The Amazon founder is at the receiving end of propaganda by ‘political Hindutva’ bodies. He owns the newspaper Washington Post, which Hindutva groups consider to be ‘anti-India’ and ‘anti-Hindu’.

That is perhaps the reason why Jeff Bezos decided to brave the hostility and fly down to India. He knows he has to woo, what could potentially become the world’s largest e-commerce market. But, the odds are stacked against him. India's political conditions make it difficult for a foreign company to influence government policy right now. And without that, Amazon will find it very tough to take on the Jio juggernaut. Because, as Dhirubhai Ambani said once, "The most important external environment is the government of India. You have to sell your ideas to the government.“

(The author was Senior Managing Editor, NDTV India & NDTV Profit. He now runs the independent YouTube channelDesi Democracy’. He tweets @AunindyoC. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)

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Published: 16 Jan 2020, 02:44 PM IST
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