As Reliance battles with Amazon in court which has acquired the Kishore Biyani-led Future Retail, another Indian corporate behemoth, Tata Group, is ready to take on Walmart owned Flipkart and Amazon that dominate India’s e-commerce market.
Tata plans to come up with a super-app to sell all household items, ranging from grocery to cloth to medicines. As per a report by Livemint, the Group has already proposed to buy BigBasket, the leader in the online grocery market.
“Tata Sons’ digital services subsidiary Tata Digital Ltd has proposed to acquire up to 64.3% stake in Supermarket Grocery Supplies Pvt. Ltd (SGS), which sells products to commercial units through business.bigbasket.com in the first step. Subsequently, SGS may acquire full control of Innovative Retail Concepts Pvt. Ltd (IRC), which sells products to customers through bigbasket.com,” reported Livemint.
Moreover, the Tata Group is also buying a controlling stake in 1mg, the leader in the pharmacy and lab testing business. Tata Group is itself present in more than 100 consumer item segments, from tea to salt to electronics, and by acquiring the market leaders in online grocery and online pharmacy, the company would build an unmatchable range of products at very competitive prices.
Moreover, by expanding into e-commerce, Tata Group has an opportunity to consolidate many of its businesses that are not making profits and have been directionless in the last few years. Except for the Tata Consultancy Services and Tata Motors, more than hundreds of other businesses that the group has, have not been able to make good profits.
The e-commerce business would thus, provide an opportunity to bring all consumer products businesses on a single platform and consolidate them.
TCS’ prowess in tech would help the e-commerce businesses of the Group. One of the reasons for the potential of Tata Group to rise in the e-commerce sector, apart from the legal case in the Supreme Court against the purchase of Future Retail, is that Reliance’s e-commerce business has not taken off very well is black of strong tech support.
TCS has provided tech support for the digital transformation of some of the world’s largest retail chains including Walmart, Tesco Plc, Aldi Inc, Target Corp, Best Buy Co and Marks & Spencer Group Plc. The experience of TCS with European and American retail chains would help the Tata Group to come up with the best possible application (super-app) to support its e-commerce business.
Amazon’s prowess in tech and cloud computing helps the e-commerce giant, and it is as much a tech company as a consumer services company. Similarly, Flipkart was also started by techies. On the other hand, Reliance’s primary capability is in consumer services, not pure technology.
Tata, under the leadership of former TCS Chief N Chandrasekharan, is exiting from the businesses in which it is not competitive, and wants to keep its focus on software, automobile, and now e-commerce. Since Chandrasekharan took over, Tata Group has become a more focused business than it was a few years ago.
Tata’s venture would intensify competition in India’s e-commerce business. Given the exponential increase in internet penetration across the length and breadth of the country in the last few years, the e-commerce market is expected to expand at a double-digit pace riding on tier-II, tier-III and rural markets.
With the Modi government’s Aatmanirbhar drive, the domestic businesses would be prioritised over the foreign ones, especially over the likes of Amazon which openly flout government rules and regulations. So, Tata is in a very unique position to challenge the dominance of Amazon and Flipkart in India’s e-commerce market. Its strong tech support system and presence in more than 100 consumer businesses will help the group to come up with a product that will have the best use of technology and commerce.