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Amazon and Flipkart to Face New Competitor For India’s Online Business

Mega-etailers Amazon and Walmart-owned Flipkart will soon have to defend their turf against India’s newest online marketplace.

Spearheaded by the wealthiest man in Asia, Mukesh Ambani, new startup JioMart is vying for consumers’ wallet share in the world’s second most populous country.

Ambani’s Reliance Industries and its two subsidiaries, Reliance Retail and telecom company Reliance Jio, have soft-launched JioMart in the regions of Navi-Mumbai, Thane and Kalyan, according to the company’s website.

The e-commerce marketplace will offer fast, free delivery with no minimum order value on a roster of more than 50,000 grocery products sourced from local grocery chains. Currently, shoppers can pre-register for access to JioMart and take advantage of an offer to save up to 3,000 rupees (over $40) when service commences. A concrete start date is yet to be announced.

The recent move almost certainly comes as unwelcome for Amazon, which was exploring plans to purchase a minority stake in Reliance Retail, India’s highest-grossing network of brick-and-mortar stores, in August of last year. With 10,644 locations in more than 6,700 cities across the country, the alliance would have been a tactical masterstroke for the online giant.

The talks between the two companies began after a tentative deal with China’s Alibaba fell through due to an inability to agree on valuation. And in September, Amazon’s efforts to plant a stake suffered a similar fate when negotiations with Reliance Retail came to a halt.

The Indian government tightened regulations surrounding foreign direct investment in early 2019, which may have complicated—and ultimately soured—the arrangement. According to FDI norms, a retail marketplace like Amazon should not own a stake larger than 26 percent in any of its own sellers.

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Amazon isn’t alone in wanting to ingratiate itself with the country’s massive consumer base. Another American power player, Walmart, became the largest shareholder in India’s Flipkart in 2018. Seeking to cement its presence in the region, Walmart paid $16 billion for a 77 percent controlling stake in the ultra-popular online marketplace, which sells apparel, electronics and more.

Silicon Valley auction site and marketplace eBay also launched a bid for India’s online business last July through a partnership with Paytm Mall, an e-commerce marketplace run by Paytm, India’s leading online payment system.

While e-commerce is a burgeoning channel in India, industry experts see massive potential for growth over the coming years as companies expand their services to new regions and offer a wider assortment of products. A study from Deloitte India and the Retail Association of India last year revealed that online shopping in the country is slated to grow into a $84 billion industry by 2021, nearly quadrupling in size from 2017 ($24 billion).