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Indian business tycoon Mukesh Ambani has launched a service that aims to compete with Amazon in the South Asian nation. Reliance Industries, an Indian multinational conglomerate company owned by Ambani, began inviting people to sign up for its grocery delivery service called JioMart on December 30.
JioMart will cater to online shoppers in three Indian cities, namely Navi Mumbai, Thane and Kalyan, with plans to scale it up gradually. The app will work on an online-to-offline (O2O) marketplace model, which means that it will source grocery items from nearby merchants, a similar model to Amazon’s delivery service, Prime Now, and India’s retail service, Grofers.
JioMart will offer customers free home delivery, with no minimum order value and a no-questions-asked return policy.
Protests against foreign business practices
When Amazon and Walmart first entered Indian shores in 2018, local merchants felt they were being put out of business, claiming that the US-based retailers were trying to monopolize the industry. More than 50 merchants gathered in the capital New Delhi, with around 700 similar protests against the e-commerce giants’ business practices in December 2019.
“Amazon and Flipkart are a second version of the East India company. The motive of Amazon and Flipkart is not to do business, but to monopolize and control,” said Praveen Khandelwal, national secretary of the Confederation of All India Traders (CAIT) at a protest against the retail giants on December 12. Khandelwal made a comparison between Amazon and the East India Company, which was a British trading house whose arrival in India kicked off nearly 200 years of colonial rule.
The merchants allege that the US giants are pricing them out of the market with deep discounting.
Flipkart is an Indian e-commerce company based in Bengaluru and owned by Walmart. Flipkart claims it has over 60% market share in the Indian e-commerce market, while Amazon is believed to have about 30% market share.
With the emergence of JioMart, the two US retail giants are expected to see fierce competition in the e-commerce industry in 2020.
Response from government
The recent protests have prompted the Indian government to look into setting up a regulator to monitor the pricing set by Amazon and Flipkart.
Prime Minister Narendra Modi’s administration is under pressure from small traders, a traditional support base for his party. Modi has defended the online retailers saying that e-commerce has the potential to create about 12 million jobs in India, thereby giving opportunities to smaller businesses.