Amazon has won the battle for Indian retail dominance, but it still has concerns

Online retail giant Amazon has a love-hate relationship with India, the world's second-largest internet market.

An investor previously said that although India's contribution to Amazon's total sales is not large at present, it may contribute 15%-20% growth to Amazon in the next five years. The importance of the Indian market to Amazon's future development is self-evident, so Amazon pays special attention to the Indian market and takes frequent actions.

Recently, in order to defend its advantages in India's e-commerce and retail sectors, Amazon, the world's e-commerce giant, has resorted to lawsuits in India against a company owned by Asia's richest man.

Amazon had filed the case against Future Retail, which was planning to sell assets to billionaire Mukesh Ambani's Reliance Industries, accusing Future Group of breaching its partnership contract.

In October 2020, Amazon obtained a temporary termination order on the deal from the Singapore Arbitration Court. On Monday (February 22), the Supreme Court of India approved Amazon's request to terminate the approval of Future Group's sale of assets to Reliance Industries for US$3.4 billion, effectively stopping the deal.

Amazon won the case because it had "pre-arranged a deal". It is reported that Future Group, the third party in the lawsuit, agreed to sell its retail assets worth US$3.4 billion to Reliance Industries in early 2021. However, Amazon held a 49% stake in Future Coupons in 2019, thereby indirectly holding part of the equity of its parent company, Future Retail.

It is learned that Amazon told the Indian court that as part of the above transaction, Future Group cannot sell its assets to several Indian companies, and Reliance Industries is on this banned list.

This decision by the Indian Supreme Court was what Amazon had been eager to see, meaning that the company had once again won the battle for dominance in India's retail industry.

Why do I say that? Because this retail asset transaction involves Reliance Industries, India's largest local retailer. Founded in 2006, Reliance Industries has more than 3.5 million registered users, which can undoubtedly effectively threaten Amazon's market position in India's retail industry.

Currently, Amazon and Walmart's Flipkart are two major platforms competing against each other in the Indian retail market. Needless to say, the competitive pressure from Flipkart and its giant Walmart is great. At the same time, Reliance Industries has launched an e-commerce platform called JioMart in many states in India, which has undoubtedly become another rival that Amazon cannot underestimate.

Flipkart alone is enough to give Amazon a headache, and the latter naturally does not want more strong rivals to emerge. Walmart is well-established, and it is relatively easy to deal with Reliance Industries, so Amazon has targeted Reliance Industries. Amazon is bound to do its utmost to stop a retail asset transaction worth US$3.4 billion.

Amazon clearly has the upper hand, but that doesn't mean the company is free of worries.

It is learned that Amazon and Flipkart, a subsidiary of Walmart, have formed a "duopoly" in the field of online retail in India, which has attracted the attention of Indian regulators. The country has introduced some e-commerce regulatory measures with the intention of limiting the development speed of Amazon and Walmart in the Indian market.

Indian regulators have noticed the impact of Amazon and other external platforms on local companies and have taken relevant actions. This time, Amazon has once again suppressed local Indian retail companies and is likely to become the focus of Indian regulators.

Among them, the Confederation of All India Traders (CAIT), which claims to represent 80 million retail stores in India, recently urged the government to end Amazon's business in India. Earlier, Reuters reported that Amazon has given preferential treatment to a small number of sellers on its Indian platform for many years and used them to circumvent the country's strict foreign investment regulations.

CAIT said in a statement that the shocking content of the Reuters report was enough to immediately ban Amazon's operations in India.

In addition, Amazon has been caught up in an antitrust whirlpool in recent years. Just recently, Andrea Coscelli, CEO of the UK Competition and Markets Authority (CMA), said that the department has issued a warning to large technology companies and plans to conduct a series of antitrust investigations on the practices of Internet giants, including Amazon, in the next year.

Over the past period of time, it seems that it is difficult for Amazon to get rid of the shadow of the word "monopoly". The more severe the suppression and impact of Amazon on local Indian retail companies, the faster it will slide into the abyss of monopoly. At that time, India may also raise the anti-monopoly banner against Amazon.

Blessings and disasters go hand in hand. Amazon, which has won another battle for dominance in the Indian retail market, may be in danger.