A Report on Amazon & Reliance Origin, Growth Stories, and Key Insights

Published by Finance and Investment Cell Shri Ram College of Commerce

Contributors

Gokula Krishnan Parth Ranjit Kulkarni Rishab Didwania Rishabh Khetawat Vatsal Sharma Vidhya Sriram A Report on Amazon & Reliance

Table of Contents:

S.N. Topics Page No.

1. Overview 3

2. Key People 7

3. Sectors and Profits 9 4. Similarities in Business Activities 12

5. A bit on Failures 14

6. Competition Survey 15 7. Conclusion 20

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1. Overview

Amazon Amazon started as an online bookstore based in Seattle. It was founded by Jeff Bezos in 1994. This idea supposedly dawned on him when he came across astonishing growth prospects in internet and e-commerce-based businesses. He chose to market books online as it was a low value, low risk, high demand product to ship and deliver. Though the short-term goal was to start an online retail venture to make books easily accessible by all, the long-term ambition was to establish a platform wherein customers could purchase every product possible. Within a few months of commencing business, Amazon had delivered across 50 states of the USA and 45 different countries. In the initial stages, Amazon received a lot of discouragement as brick and click stores like Barnes and Noble were also on their way to launch online bookstores and revolutionize the way retail bookstores looked and functioned. To combat this competition, Amazon launched 4.5 million titles that could be browsed through on a computer. The easy accessibility, smooth interface, relatively competitive pricing, and delivery system made consumers purchase frequently at Amazon instead of its competitors. To keep up with rapid growth and demand, Amazon had to open its doors to private investors in 1997. Later, Amazon went public with a market valuation of $300 million. Raising funds helped them aggressively expand into other product lines - in 1998, they started selling DVDs and Videos, the music section had a whopping 125,000 titles which was a high number in comparison to physical music stores. In 1999, Toys, electronics, home improvement, software, and video games. Furthermore, in 1999, Amazon patented the 1 click technology worth billions of dollars, which allowed customers to avoid the hassle of entering and re-entering shipping and payment details and made the transaction process quicker and simpler. Amazon licensed this technology to other websites till 2017, when its patent expired. Between 2000 to 2010, the E-commerce landscape had transformed drastically, and Amazon played a significant role in this change. People preferred to shop from the comfort of their homes instead of visiting retail shops, which became the new normal in retail shopping to a large extent. In 2005, Amazon launched its prime services which provided a quicker and simpler ordering process, free delivery – thus resulting in massively improved consumer loyalty. Amazon brought about changes in the Economy of the US as well, bringing in severe price-setting competition in the market. Earlier, retailers responded in terms of price changes only due to inflation or sudden changes in competition. However, with the growth of Amazon, online retail depended on market demand causing frequent changes in price setting. It also brought about uniform prices across the country and eliminated price discrimination to a certain extent. This meant the market was now flooded with cheaper goods, which was good news for the lower-income groups. Hence, a huge chunk of the population started preferring buying goods from online retailers who had established a presence on Amazon.

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AWS: Bezos envisioned amazon as a technological company, more than a platform for retailers. However, till 2000, amazon held inventory in warehouses and held control in its delivery system. Post that, amazon allowed other small companies or individual sellers to operate via their platform. Amazon saw huge surges in traffic and orders, but they started facing scaling issues as their software was slowing down, both in efficiency and in terms of responsiveness and serving their customers. To cope with this situation, Amazon started working on Amazon Web Services or AWS, which would provide cloud computing platforms to individuals and companies. Amazon began to splinter its three largest data sets — customers, goods, and orders — into separate items that, in turn, were broken down into smaller units, such as login information or security requirements. At the same time, Amazon began offering computer systems and tools, such as renting IT infrastructure and applications online to other tech ventures, so they could sell their products via Amazon.com. Amazon brought structural change into the way customers sought their computing needs, whether it was storage or networking. The customers could just rent it and use it as they go. After years of research and development and a mighty amount of funds being invested in the process, they launched AWS with its cloud product Simple Storage Service (S3), which rented data storage and Elastic Compute Cloud (EC2). At $10.22 billion in quarter 1 of 2020, Amazon Web Services revenue grew 33% on an annualized basis and it became Amazon’s fastest-growing source of revenue that formed a bulk of the profit. As of 2020, AWS offers a broad set of global cloud-based products including compute, storage, databases, analytics, networking, mobile, developer tools, management tools, IoT, security, and enterprise applications.

Amazon Kindle: Amazon launched Kindle in 2007 with the sole purpose of bringing digital books to readers on a device with minimal distractions. This device was never meant to compete with tablets, PCs, and other mobile devices, but to have its niche place as a convenient book reading device. The features of the first kindle were a quirky keypad, a headphone socket, speaker, and minimal storage. However, since then, 12+ models later, Kindle has come a long way in terms of increased resolution, touch screen, screen size, waterproofing, auto-brightness settings, sleeker and flatter display, better storage, Bluetooth options, and much more. E-book sales soared up 1,260 percent between 2008 and 2010, and readers preferred it over print versions. Bookstores and Publishers faced this phenomenon with great dismay as this could eat up their business. This fear further aggravated when Borders declared bankruptcy and Barnes & Noble, which was once a huge shark in the bookstore business moved on to shut down over 150 stores in the past decade. Kindle has also somewhat taken a hit in the past few years mainly due to three reasons. Firstly, the rise in streaming platforms like Netflix has shifted a huge chunk of the new generation into being binge-watchers, rather than binge readers. Secondly, better quality tablets and mobile devices in the market have led people to

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invest in one device rather than buy a separate device for reading. Lastly, readers have started showing increased affinity towards prints than E-books, a classic scenario of change in preference amongst consumers. So, the terror that Kindle once was for bookstores has now dwindled, but it remains the leader of E-reading platforms.

Amazon Echo: In 2014, Amazon Echo, a smart speaker whose Virtual Assistant is famously known as Alexa was launched into the market by AmazonLab126. Initially, Echo was capable of controlling music and not much else. But Alexa, the AI technology behind Echo was developed over the years to allow one’s voice command to control it all. Amazon revolutionised the market for smart home appliances, as it could all be linked to Alexa and operated via voice command. It has sold more than 100 million Echo devices, integrated Alexa with 85,000 smart home products, and its app store now boasts over 100,000 skills. Alexa allows voice interaction, access to real-time information, weather forecasts, podcasts, music streaming, controlling home appliances and much more. Alexa combines the Amazon Web Service (AWS), high- quality speech synthesizer and an independent speech recognizer, which is tied to simple hardware to listen to commands in speech form and decode the commands; and responds with the appropriate responses.

Physical Retail shops: Retail apocalypse has been a huge issue in recent times, where colossal retail-based companies have come to shut down multiple shops across the world. The major two reasons that are held responsible are the e-commerce boom and debt traps that companies got caught into. Despite such trends E-commerce giants like Amazon have entered the brick and mortar space but they come with a twist. Amazon has rolled out different types of retail outlets ranging Amazon Go Grocery, which has a no cashier system, Amazon books outlets, Amazon Pop Up themed kiosks, Amazon general merchandise stores, Amazon Fresh Pickup grocery pickup locations, and the 500 whole foods outlets that it has secured. Identifying the ideal type of store which is most well suited to the consumers in that location has been the reason behind this slow yet targeted approach that they have taken up. The objective behind this endeavour is not only to conquer the physical retail space they were initially missing out on but expand the Amazon ecosystem and consumer base. For example, if an individual buys an Alexa from the Amazon store, they will eventually purchase prime for shopping, becoming a member of other Amazon services as well. Amazon has also entered the Indian brick and mortar market as well and with an aim of having kiosk stores, wherein customers will be able to experience the products it sells online. With an already huge user base of Amazon Pay in India, they see huge growth potential for their smart store idea as well in the country and have been working towards it by concentrating on building a better warehousing and delivery system.

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Reliance In 1957, returned to India from Aden, Yemen. He and his cousin Champaklal Damani founded Reliance Commercial Corporation which ran a polyester business. However, in 1965 the partnership ended but Dhirubhai continued the business] and a year later Reliance Textiles Engineers Pvt. Ltd. was incorporated in and a synthetic fabrics mill was set up at Naroda in . The name was changed to Reliance Textile Industries’ and the company expanded into textiles and ‘Vimal’ was its major brand, which became a leader in the textile business). Then in 1977, Reliance Textile Industries’ conducted its Initial Public Offer which got oversubscribed seven times. In 1979, a textiles company, Sidhpur Mills partnered with Reliance Textiles Industries Limited. The following year, the company expanded its polyester and yarn business by establishing a Polyester Yarn Plant in Raigad, Maharashtra. In 1985, Reliance Textiles Industries Limited was renamed to Limited, the name of the biggest conglomerate in India today. In 1993, they took to overseas capital markets for funding which was done via a petroleum depository issue of . During 1995-96, they entered into a joint venture with Nynex, US to establish their presence in the telecom industry and formed Reliance Telecom Private Limited. RIL then became India's largest private-sector enterprise and had a huge role in the petrochemicals sector of India. Additionally, they became the first private company from India to be rated by international credit agencies. In 1998, Reliance Gas came about which started packaging Liquid petroleum gas in compact 15 kg cylinders. Over the years, the companies became stronger than ever and in 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. were the two largest companies of India in terms of all major financial parameters. The following year, Reliance Petroleum Ltd was merged with Reliance Industries Ltd. Reliance also established the world’s largest Petrochemical unit at in Gujarat. They made one of the most important oil discoveries of the world in 2002 which made them the first Indian private company to do so. The volume of Natural gas was around 7 trillion cubic feet i.e. 1.2 billion of crude oil barrel at the Krishna Godavari basin. In the same year 2002, Reliance bought a stake in the Indian petrochemicals corporation limited. The company entered the fields of power distribution and generation and became a leader in four separate businesses: Power generation, Power distribution, financial services and telecommunications. In 2006, they entered the organised retail marketing India under the name of , and within two years they had around 600 stores across 57 cities in India. In 2010, they entered the broadband service market by acquiring Infotel broadband services limited (IBSL), the leading bidder in the 4G spectrum auction which the Government held. In the following year, and Reliance joined their hands in the Oil and Gas arena. Bharat Petroleum took a 30% stake in the oil and gas production contracts that reliance operates in the country and the KG-D6 block. They also entered a 50-50 partnership concerning marketing and sourcing of gas in the country. In 2016 they launched and offered free data and voice services until March 2017. Within four years of its launch, Jio became the country's largest telecom operator with a subscriber

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base of over 400 million and growing. In 2017, they entered into a joint venture with Russian Company Sibur for setting up a rubber plant in Jamnagar, Gujarat, and was functional by the next year. In August 2019, Reliance joined hands with Fynd for its consumer-based and mobile phone services on the e-commerce front. 2020 was a landmark year in recent history for Reliance as it proceeded to wipe out the entirety of its debt. RIL became the darling of the Silicon Valley as giants like Facebook and google proceeded to fund it with Rs 43,574 crore for a 9.99% stake and 33,737 crores for a 7.73 percent stake in respectively. Jio Platforms raised $15.2 billion amidst a pandemic which is more than what the Indian tech start-up ecosystem itself could raise in the last year. Few other sources being private equity firms like Silver Lake and KKR, sovereign wealth funds like the Saudi Public Investment Fund, and strategic investors like Intel and Qualcomm. Over the years, RIL has become one of the most lucrative options for individual and institutional investors.

2. Key People

Amazon

When talking about eminent personalities of Amazon – the obvious and only name which comes to mind is Jeffery (Jeff) Bezos. Bezos founded Amazon in 1994 out of his garage and has grown it into the multi-billion-dollar company it is in a span of 26 years. Currently, Bezos owns an 11.1% stake in Amazon and his net worth is estimated to be around $175 Billion, making him the world’s richest person on the planet according to Forbes magazine. Bezos has also been named the TIME person of the year in 1999.

Bezos’ management style is inspired by Chicago’s Marshall Field, who coined the slogan: “The customer is always right.” According to the managers at Amazon during every conference meeting, Bezos keeps one chair empty and informs all attendees to consider the seat occupied by their customer,” the most important person in the room.” Bezos also emphasizes what customers don’t want, i.e. delays, defects and out-of-stock products. This customer-centric approach has enabled Bezos to grow his company exponentially and reach where they are today.

In the past few years, Amazon has also faced the dissatisfaction/brunt of the public due to some of its policies which the company adopts to avoid paying taxes, not improving the conditions of its minimum wage workers, or the simple fact that a company owned by the world’s richest man has more interest in exploring the frontiers of space instead of combating poverty, global warming, resource shortage or even making basic amenities such as clean drinking water, electricity or education to the poorest population of the world.

Apart from Bezos, the one other name which is commonly associated with Amazon is Mackenzie Scott, who was married to Bezos for 25 years but split in 2019 - whereas a settlement was the recipient of a quarter of Bezos’ Amazon stake. This stake is valued at around $35.7 billion, this valuation makes her the 6th richest woman in the world.

Reliance

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Dhirubhai Ambani

Dhirubhai Ambani is a name known to all. He is the pioneer of the entrepreneurial spirit in India, the huge Reliance Industries we see today is the result of his majestic vision. His work has not only brought riches to himself but also changed the destiny of the nation. With his educational background of only clearing up to 10th standard, he had to trade between many petty jobs to earn his bread. However, his ambitions were very above his economic conditions and it was during his employment in a petrol pump that he decided to become a businessman.

He began trading spices in the late 1950s and soon was able to expand his operations into various other commodities. What set him apart from his competitors was his persistence to stick with higher quality products irrespective of earning small profits. He set up his office which then and only two assistants and a team of well-trusted people who would in the years to come become the pillars on which Reliance stood for years. The team included Rasikbhai Meswani (his nephew), Ramnikbhai, Nathubhai (his younger brother), and two former schoolmates named Rathibhai Mucchala and Narottambhai Joshi.

Dhirubhai was the king of equities and a true risk-lover, he is regarded as one of the top businessmen of the 20th Century. In 1966, he formed his first company, Reliance Commercial Corporation which would go on to become the billion dollars worth of Reliance Industries that we have now. Dhirubhai Ambani is widely regarded as a business genius, innovative, dynamic, and a pioneer in the Indian private sector.

Mukesh Ambani

After the death of Dhirubhai Ambani, the responsibility of his empire fell into the hands of his two sons- Mukesh and Anil who held high positions in the company. Soon, both had a conflict and their mother Kokila Ben had to interfere and mediate the deal under which Mukesh was given the control of business operations concerning gas, oil, and petrochemical units under the umbrella of Reliance Group. Mukesh had the same entrepreneurial spirit as his father and he took major steps from the very beginning like spearheading the creation of the world’s largest petroleum refinery at Jamnagar in Gujarat which has a capacity of over 6,60,000 barrels of oil per day which is equal to 33 million tonnes of oil in a year. He then set-up another plant in Jamnagar with a capacity of over 5,80,000 barrels of oil daily. This brought the total capacity to over 1.24 million barrels per day in Jamnagar which has since become the refining hub of the world. Mukesh also led the development of infrastructure facilities to set-up and implement a retail network spanning multiple formats and with a reach all around the country. The result of this was - the largest organized retail player in India now. His acquisition of Future Group has increased the presence of Reliance in the consumer and retail segment.

Perhaps the biggest brainchild of was the launch of telecommunication service, Jio which has created global records in terms of customer acquisition. It has in just a few years taken away the market shares of old telecommunication companies to become the leading player in the market. Jio is now the most popular 4G wireless network not only in the country but also in the world. Jio offers various digital services in the domains of education, security, financial services, government services, and other domains of national interest.

Nita Ambani

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Nita Ambani’s role in Reliance is much more than what meets the eye, she played a key role in RIL’s decision in 2010 to buy a 14.80% stake in East India Hotels, where she now holds a position in the board of the company. She has also played a key role in the expansion of Reliance Retails to the highest position in the market. She also made a mark when she was part of the team that developed the , particularly her initiative to transform the arid zone into a green belt with mango plantations. This decision showed her concern for the greater good and conservation of the Environment. She has been the face of the CSR activities of the group and is currently the founding chairman of the Dhirubhai Ambani International School and also plays a very major role in the decisions and activities of the .

3. Sectors and Profits Reliance Reliance Industries Limited has very diversified routes of business. Its major business operations can be divided into 6 major sectors that are as follows: 1. Retail 2. Digital services 3. Media and Entertainment 4. Refining and Marketing 5. Petrochemicals 6. Exploration and Production Retail With a Vision to be the most admired and successful organised retail company in India that enhances the quality of life of every Indian, Reliance Retail’s Mission is to: Provide millions of customers with unlimited choice, outstanding value proposition, superior quality and unmatched experience across the full spectrum of products and services Serve the entire spectrum of Indian society i.e. from households, kiranas and traders, to small and medium enterprises and large corporations Reach the length and breadth of the country through our physical and digital distribution platforms Enable the choice, opportunity and livelihood of our supplier ecosystem consisting of producers, farmers, artisans, craftsmen and manufacturers Generate direct and indirect employment opportunities with skill transformation and talent development on an unprecedented scale, Reliance Retail has 5 segments under it, - Consumer electronics, Fashion & Retail, Grocery, Connectivity, and Petro Retail. It aims to further expand and incorporate JioMart soon through a pilot project in select cities. The retail units have proven to be profitable for Reliance and each of its subsidiaries has shown positive YoY growth through an increase in revenue. From FY 2018-19 to FY 2019-20, its retail revenues have seen an increase of INR

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32,370 crores or a 24.79 % increase while the EBITDA has seen a jump of 55.7 % from the previous financial year. Digital Services The Digital Services desire to connect everyone and everything, everywhere – always at the highest quality and the most affordable price. Jio’s vision is to transform India with the power of the digital revolution and aims for: 1. Connectivity for every Indian 2. Superior customer experience 3. Affordable data 4. Best-in-class fixed-line solutions platforms The broadband services have observed a YoY growth of 50% in the wireless data usage for the FY 2018-19. Jio has thrived on low priced data plans which it plans to bring to the table once 5G comes to India. With increasing data users and by penetrating more into the network zones, Jio now alone carries over 4.5 Exabytes (1 Exabyte= 1 Billion Gigabyte) per month. The overall Digital Services observed a jump of 46.8% in its EBITDA for the FY 2019-20. Media and Entertainment Reliance Industries controls Network18, which is an Indian Media and communications company. Network 18 owns 56 channels in India and additional 16 channels internationally. Network18 aims to be a channel-agnostic provider of top-drawer content, across genres, regions, and languages. It aims to be India’s top media house with unparalleled reach and touch the lives of Indians across geographies and genres. Under it is media, it has its own publishing business that even has Indian Forbes under the list along with a few magazines. It has a 10.5% share of news viewership in FY20. It saw an increase of 191% YoY change in Fy 2019-20. Refining and Marketing RIL Refining and Marketing controls the Reliance Petroleum retail, Reliance gas, reliance Aviation, Auto LPG, etc. It also refines Diesel, Propylene, LPG, and sulphur. The refining was down by 6.1% due to the Coronavirus pandemic. It has always been RIL’s goal that the Jamnagar Refinery shall be the refinery icon of the world with best-in-class performance, with a mission to ensure that the Jamnagar refinery is future-ready with strategic information to optimal oil-to-chemicals. Petrochemicals RIL Petrochemical industry faced a challenging year to increased geopolitical tensions and the global pandemic. Its revenue fell by 6847 crores in the FY 2019-20 and the overall supply remained slow. Exploration and Production FY 2019-20 revenues for the Oil and Gas segment decreased by 35.8% y-o-y to `3,211 crores. Volumes from domestic upstream fields and US shale were lower because of natural

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decline and slowdown in development activity. Segment EBITDA was at 353 crores as against 1,642 crores in the previous year. For the year, domestic production (RIL share) was at 38.8 BCFe, down 34.1% y-o-y and in US Shale (RIL share), the business was 80.4 BCFe, down 14.9% y-o-y basis.

Amazon Amazon.Com is not just the world’s biggest online retailer; it also has its own diversified businesses into various sectors. Its operations are spread over the core e-commerce operations, cloud services, digital advertising, groceries, etc. It has its AI-based assistant- Alexa and is also into movies & television shows through Amazon Prime Video. Being one of the world’s top companies by market value, it has a market capitalisation of roughly $1.6 trillion. The pandemic could not slow down its operations as the consumers were left with barely any other options once the traditional brick and mortar stores were put into lockdown. Amazon’s net income nearly tripled YOY in Q3 2020. Amazon divides its business segment into 3 segments or regions: North America, International and Amazon Web Services (AWS). Its retail segment can further be broken down into online stores, comprising the bulk of sales, and physical stores. Company-wide, online stores accounted for $48.4 billion in sales in Q3 2020, or about 50% of net sales, while physical stores generated $3.8 billion in sales or about 4% of net sales. North America and International The North American region dominates Amazon’s sales division by accounting for 62% of the net sales for Q3 2020. The International or the Rest of the World has not thrived for the company in the recent past. The company has lost money in each of the last 3 years in its international segment, however, in Q3 2020, an operating profit of $ 407 million was achieved compared to the $ 386 million loss for the year-ago quarter. Net sales for the International segment grew 37.2% to $25.2 billion, comprising about 26% of the company's total net sales. AWS Amazon Web Services provides services to businesses, government agencies, and academic institutions to store information and deliver content over cloud services. Amazon’s AWS generated net sales of $11.6 Billion from $9 Billion in Q3 2019. AWS sales and profits have consistently been on an upper trajectory in the past 3 years. It must be noted that though the net sales of AWS are far below the net sales of other segments, the operating income is substantially on the higher side. Net sales for the segment comprise about 12% of total net sales and operating income comprises about 57% of Amazon's total operating income.

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4. Similarities in Business Activities A brief overview of many of both Amazon’s and Reliance’s key competitive factors presents many parallels in business operations for both companies. Loyalty Programmes Apart from the discounts and quality, both companies use the benefits of a loyalty programme to encourage customers to continue to shop at or use the services of a business associated with the program. Using a Reliance-One membership, a person who avails a coupon in Reliance Trends is motivated to use it in Footprints, Jewels, Smart, Digital, Vision Express, etc. Amazon provides Prime membership, encouraging its customers of one segment, say E- Commerce to build its market in streaming services. Data Collection Reliance widely engages in collection of consumer data. The collected data is used for determining their ways, fields, and time of expansion. It also puts them in the right use for a personalised approach with its consumers in the future. Amazon uses Big Data gathered from customers while they browse to build and fine-tune their recommendation engine. The more Amazon knows about you, the better it can predict what you want to buy. And, once they know what you might want, they can streamline the process of persuading you to buy it – for example, by recommending various products instead of making you search through the whole catalogue. Optimum use of Consumer Surplus Reliance does not only want to find out what a consumer wants, but also induces a potential customer to avail of its services irrespective of whether he needs it or not. Estimating a demand curve and finding the consumer surplus using the data collected helps the firm put its consumer surplus to best use Amazon also uses the data to estimate its consumer surplus. Amazon’s recommendation technology is based on collaborative filtering, which means it decides what it thinks you want by building up a picture of who you are, then offering you products that people with similar profiles have purchased. For example, Amazon can take a surprisingly good guess at your income level based on where you live. This mountain of data is used to build up a “360-

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degree view” of you as an individual customer. Amazon can then find other people who fit into the same precise customer niche (employed males between 18 and 45, living in a rented house with an income of over $30,000 who enjoy foreign films, for example) and make recommendations based on what those other customers like. Marketing Strategies When it comes to making positive brand consciousness, Reliance Jio has adopted a bit aggressive marketing strategy including launching ad campaigns on television, radio, newspapers, magazines, and social media platforms like Instagram, Facebook, Twitter, and YouTube. They also have used film industry stars and celebrities’ power to do acting in their commercials ads and become joined with their brand. In terms of its value proposition, Amazon’s marketing is fuelled by its Prime customer loyalty program. Loyalty program members, furthermore, spend 5 to 20% more than non- members, and purchase frequency for loyalty clients also tends to rise by 5 to 20%. When customer loyalty software is augmented by a referral marketing program, the growth is even better. One trait which is similar with Amazon and Reliance is that they stick to one way of marketing and lay their full emphasis on it. Pricing Reliance uses the EDLP strategy for pricing for the Reliance Mart chains. In retail parlance, EDLP means ‘Everyday Low Price’, which means consumers will enjoy the same low price every time they visit the store across the year. In business vocabulary, EDLP means 'Everyday Low Price', which means consumers will enjoy the same low price every time they visit the store across the year. Reliance follows the EDLP strategy for its slew of private labels as well as associate brands (those owned by other companies) that are sold through retailers. It ties up with companies directly to procure the merchandise, thereby bypassing the various supply chain layers. This ensures much greater control on the margins and offers attractive pricing for consumers. Similarly, Amazon’s pricing model is based on keeping prices as low as possible for the buyer. This means the prices of products can change numerous times, even during a single day. Keeping prices low drives loyalty within their customer ranks. Amazon’s pricing model also takes things one step further using convenience. We all see the convenience of buying online. But when you have so many merchants competing to be a top seller for just one product, you always have a depth of easy choice for customers, that rarely runs out of stock. This again drives loyalty, increases sales, and keeps both merchants and customers coming back for faster-rolling profits and purchases. Brand Loyalty The brand has its reputation in the market, which acts as insurance even in case a fault is spotted. This reputation helps Reliance to have its customers remain loyal to them and the brand lays huge emphasis on maintaining its reputation, as much as it cares to expand the scope of the market.

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The brand loyalty shown by the customers of Amazon is a result of the convenience and the time saved by Amazon in the shopping activities. Amazon has always succeeded in convincing the public to remain loyal to the brand as the customers are more inclined towards a smooth and comfortable shopping experience. Adding to this, all the business activities carried on by Amazon including OTT, have always prioritised customer's comfort and ensured its full achievement. Monopolistic Behaviour The monopolistic intention of Reliance was visible since the day Jio was launched. Each step taken by Reliance in Jio, ranging between providing services for free at the cost of the company, and conquering almost the entire telecom industry can be seen as a sort taken towards achieving monopoly in its fields. Reliance's influence in determining the market price level shows how successful the brand has been in achieving what it intended to. Even though the statement that 'Amazon has achieved monopoly' cannot be said as a fact, its activities and the way customers remain loyal and reliant on Amazon only raise thoughts of monopoly-like situations. While other e-commerce sites exist and are competitors in a competitive field among themselves, the gap between them and Amazon is huge.

5. A Bit on Failures Amazon The Amazon Kindle which was first launched in 2007 was among the initial hardware to be created by Amazon to provide individuals the ability to read books wherever they wanted. Kindle created the method for Amazon to introduce a brand new line of products the Amazon Fire series in 2011 by the Amazon Fire Tablet, this was Amazon’s plan to compete with alternative tablets within the market and was received well among the people. The success of the Fire Tablet enticed Amazon to make a phone that was essentially a tablet in the style of a phone. The phone was unable to create the impact which was desired. The high price and lack of features were the reasons cited by critics for the failure of the phone. Because of this, Amazon reduced the retail price from $200 to $0.99 for a two-year contract. Due to the failure, Amazon wrote off $170 million primarily concerning Fire phone inventory valuation and manufacturing cost. Critics called the whole incident Amazon’s 1st and largest failure. Reliance Recently, Reliance Jio has been the talk of the town and has skyrocketed since its launch to become the most sought after telecommunication services in India. However, RIL has not always had a good run with telecommunications. Before Jio existed, Reliance Infocomm was the Crown Jewel of Reliance Industries Limited. In 2002, RCom set itself apart from the competition at a time by offering incoming calls for free along with a handset all for Rs 500

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when competitors were charging Rs 4-6 for incoming calls per minute, as part of its famous Monsoon Hungama plan. In 2006, received the company as a part of a settlement with his elder brother Mukesh Ambani. Anil Ambani wrote off Rs. 450 Crore accumulated on account of the Monsoon Hungama plan and renamed the company Reliance Communication (RCom). RCom started to develop the GSM in 2007 and rolled out services in approximately 12 months. To promote these services, RCom grabbed users through aggressive pricing strategies and had the ambition to reach 100 million users. The total investment made by RCom to develop the GSM Services was Rs. 13,980 Cr. In 2010, Anil Ambani identified an opportunity to develop 3G services, and Reliance Communications paid Rs 8,585 crore to buy the 3G spectrum in over 13 circles, which included the expensive circles like Delhi and . By the end of 2010, the investment seemed to be paying off, and RCom acquired 125 Million users by December 2010. In 2012, RCom failed to hold on to the No.2 spot which was filled by Vodafone, In 2016, RCom moved further down to No.4 and lost nearly 17 per cent market share. In 2013 RCom’s debt ballooned to a total of 35,600 Crores after it failed to monetize towers. The entrance of Jio in 2016 did not help RCom’s situation and later the same year it announced a merger with Aircel - which fell apart in 2017. From here it was a steady decline for Anil Ambani, with Rcom discontinuing voice services and Mukesh Ambani buying RCom’s tower and fiber services. In 2019, RCom filed for bankruptcy.

6.Competition Survey A survey was conducted with 112 respondents, mostly from the 18-25 age group. The idea was to gauge in brief what consumer habits are like in Indian markets that have both Amazon and Reliance engaged in either direct or indirect competition. With both giants consolidating market share and production power, it will be very interesting to see how their moves will affect Indian consumer markets in the coming decade.

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Q1. Out of 112 responses, only 15.2% of the people were making more retail purchases from Reliance than Amazon, just because it is an Indian Company. Majority of people (57.1 %) chose other sources and 27.7% were indifferent to this scenario.

Q2. Out of 112 responses, 51.8% (58 respondents) preferred streaming music from Jio Saavn which is owned by Reliance Industries Ltd, and not Amazon Music. However, it is important to note that Saavn is also an older platform and Amazon Music has gained traction at a much quicker pace.

Q3. For the survey consumer purchases were divided into different categories, namely: Furniture, Home Appliances, Clothing, Consumer Electronics, Personal Use Products and Groceries. Consumers were also asked the sources from which they choose while looking at a specific category to shop from. The results are as follows:

Reliance Amazon Other 1. Furniture 8 14 90

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2. Home Appliances 18 73 21 3. Clothing 30 22 60 4. Consumer Electronics 23 61 28 5. Personal Use 17 63 32 6. Groceries 31 23 58

Amazon leads in 3 out of 6 categories with large margins. Reliance is ahead narrowly in clothing and groceries but both Amazon and Reliance do not seem to be first preferences in these categories.

Q4. In this question, we assessed the various variables under which a retail company is judged. The various parameters were product quality, efficiency in services, product diversity, benefit of lower price and customer retention practices. In all these parameters, the respondents ranked Amazon at a much higher pedestal. The difference in the people favoring Amazon and Reliance is very high in almost all the options with the exception of the price levels.

Q5. To analyse the trust factor which consumers place in the E-commerce sites of both companies when they save their transaction details, we asked them to choose between Amazon, Reliance or whether they are indifferent between the both of them. 54 respondents were indifferent between both the companies forming the majority of 48.2%. Of the remaining 58 responses, 87.9% of them preferred Amazon over Reliance.

Q6. To sell your products, you need to first make your customers know about them and feel the urge to buy it. Although these companies are household names, they incur millions to market themselves as the ultimate destination. As per our survey, 86.60 percent of respondents believe that Amazon is superior to Reliance in this domain. The large margin reflects that the campaigns of Amazon are better thought of and executed, thus having a higher impact.

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Q7. Out of 112 responses, 45.5% of people find Reliance to be more ethical in its business operations, whereas the balance 54.5 % of people find Amazon to be more ethical than Reliance.

Q8. To analyse the perception that consumers hold regarding the social responsibility being fulfilled by Amazon and Reliance, we asked them to choose between both of the companies. Out of 112 respondents, 57.1% felt Amazon was more committed towards its CSR work than Reliance.

Q9. A company is made by the society and its reputation is as good as the strength of its social initiatives. 57.10% of our respondents believe that in the Indian context, Reliance has assumed this responsibility more. It has not touched the lives of people and given back to the society more than Amazon. Reliance also benefits here as India is its home country.

Q10. To analyze what do the people think is a competitive advantage that Reliance Industries Limited has over Amazon Inc., we asked the respondents to fill in the factor that they feel is the most suitable. It was found that majority of the people responded by saying that since Reliance is an Indian company, it has an edge over its counterpart. A few people also mentioned that Reliance is currently into more sectors in the domestic market catering to the

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needs of the wider sector of the Indian population and alleged close ties with the political parties as some of the advantages that it has over Amazon.

Q11. When asked areas where Amazon is better off than Reliance, the common answers included E-commerce, electronics, having a better brand value and enjoying a wider reach. They also think that Amazon has a much more product diversity and variety and markets these products in a better manner. The customer services and seem-less operations also make people prefer Amazon.

Result Overall, it seems that Amazon enjoys a better or cleaner image than Reliance does. However, that is debatable depending on the sample survey. What seems clearer is that Amazon is the clear leader in online sales platforms and there seems no substantial danger of it being unseated in the foreseeable future.

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7. Conclusion Both Amazon and Reliance have ballooned into large conglomerates with massive traction. Reliance is India’s largest private sector company and Mukesh Ambani is the richest man in Asia. Similarly, Amazon’s Jeff Bezos is the richest man in the world. There are many parallels in their growth stories – both companies began quite humbly and have snowballed into empires that no one could have thought of considering their origins. Reliance is a much older company and as a result has a far more diversified portfolio of business – and is overall a more capital-intensive empire; while Amazon is a business that requires far more working capital than investment. However, with its constant innovations, Amazon is trying to cement its status as a leading technology company even though it is known the world over as the most famous retail platform on the planet. Reliance has been emulating the Bezos-Amazon model successfully in India’s telecom markets for the last three years: cutthroat pricing has catapulted Jio to heights that would have seemed inconceivable half a decade ago. Both Amazon and Reliance focus on customer appeasement, and they have established a reputation of being aggressive and direct. It is rational to expect that the two shall remain the most formidable forces in Indian consumer markets for the next few years.

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