Focus: India's Tata gets bullish on e-commerce just as rules threaten to transform market

Tata Consumer Products

22/07/2021 08:35

* E-commerce minnow Tata vocal at meeting on rule changes
-sources
    * Tata voice hints at e-commerce ambition after online M&As
    * Tata to pilot one-stop-shop app this year -sources
    * New rules could force rethink in e-commerce plans

    By Aditya Kalra and Abhirup Roy
    NEW DELHI, July 22 (Reuters) - India's Tata Group is taking
a more vocal interest in rules shaping online marketplaces,
hinting at ambitions as it reappraises its retail strategy just
as e-commerce reform threatens to muddy plans.
    The $106 billion conglomerate yet e-commerce minnow was far
more vociferous in discussions than market leader Amazon.com Inc
 AMZN.O  at a July 3 meeting with government officials about
proposals such as the prohibition of sales of own-brand or
affiliates' goods, attendees said.
    The rules would greatly increase the compliance burden of a
conglomerate's numerous entities and interests, and hurt them
far more than smaller rivals, Tata Vice President Poornima
Sampath told the online gathering, according to two attendees.
    Tata declined to comment for this article. Sampath did not
respond to a request for comment.
    Two weeks earlier, the government spooked the industry by
proposing increased scrutiny of relationships between online
marketplace operators and their partners. The plan was widely
regarded as an attempt to curb the dominance of Amazon and
Walmart Inc's  WMT.N  Flipkart and support high-street shops.
 urn:newsml:reuters.com:*:nL3N2O41XB
    The 153-year-old Tata conglomerate is ubiquitous on Indian
high streets, so its voice in favour of e-commerce at the July 3
meeting indicates the degree to which it is changing tack.
    The firm is arguably best known internationally as owner of
British luxury car brand Jaguar Land Rover, but it also makes
cars at home under its own brand. The group is also active in
steelmaking, IT outsourcing, and hotel and airline operation.
    In retail, Tata has an expansive offline portfolio including
a joint venture with cafe operator Starbucks Corp  SBUX.O  and
stores it operates for Inditex  ITX.MC  fashion brand Zara. Yet
it is a minor player online - a situation it is determined to
rectify, said five people with direct knowledge of its plans.
    It bought the majority of online grocer BigBasket in May for
over $1 billion and in June took control of online pharmacy 1mg.
They will likely join other marquee brands on an app that Tata
aims to pilot this year, said three of the people.  urn:newsml:reuters.com:*:nL3N2NF1H4
    E-commerce is the next big thing for Tata, and with that in
mind, it plans to buy many more brands, said one of the people.
    None of the sources were authorised to speak publicly so
declined to be identified.

    TATA APP
    Tata's latest digital push is not its first. It launched its
Tata CliQ online marketplace in 2016, which booked sales of $36
million in 2019-20. Yet that compared with roughly $10 billion
at Amazon, which has invested billions of dollars in India.
    Still, in an e-commerce market widely projected to be worth
$200 billion by 2026, there is plenty of space for Tata to grow.
    Through its app, Tata plans to bring its brands together to
offer services such as grocery shopping, meal and medicine
delivery, sales of electronic products plus online fitness
packages, people familiar with its plans said. 
    Tata is still developing the app's features and determining
a go-to-market strategy, with the launch likely in phases,
starting with some large cities, said one of the people.
    Another said the pilot could begin as early as September in
the southern city of Bengaluru, India's IT hub.
    Spearheading the app is Tata Digital Chief Executive Pratik
Pal, who gained extensive experience with retailers in 28 years
at IT outsourcing unit Tata Consultancy Services Ltd  TCS.NS .
    Yet digitally integrating the multitude of businesses at a
conglomerate the size of Tata Group is a daunting task, said
Keyur Majmudar, a managing partner at India's Bay Capital,
adding that retaining customers on a super app will be tough
when there is a rise in several niche e-commerce players.
    "They need a radical shift in thinking. That (digital
integration) is something they've never done before. So, the
jury is still out," he said.
    Pal declined to comment.
    Just as Tata's new digital strategy gathers pace with
acquisitions and app development, the government has sprung a
surprise that may mean a rethink before the app is even piloted.
    A ban on marketplaces offering affiliates' products could
bar its Croma electronics chain and Starbucks from Tata sites,
Sampath said at the July 3 meeting, according to two attendees.
    A ban on sales of own-brand goods has also triggered
questions about whether it will be able to retail its household
names such as Tata Tea or Tata Salt on its e-commerce platform.
    The Tata brand name adds a level of assurance for consumers,
Sampath objected at the meeting, seeking clarity on the
government's policy plans, attendees said.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ANALYSIS-India e-commerce rules cast cloud over Amazon, Walmart
and local rivals     urn:newsml:reuters.com:*:nL2N2O41TY
FACTBOX-India's new e-commerce rules that could jolt foreign,
local players     urn:newsml:reuters.com:*:nL3N2O41NH
U.S. lobby group views India's e-commerce plan as worrying,
email shows     urn:newsml:reuters.com:*:nL3N2O618P
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Aditya Kalra in New Delhi and Abhirup Roy in
Mumbai; Editing by Christopher Cushing)
 ((aditya.kalra@tr.com; +91-11-49548021; Twitter @adityakalra;))