Tale of 3 digital ecosystems in India?—?Jio vs Amazon vs Walmart-Flipkart (Part -2)

Taking it forward from part-1 of this series, in the part-2, I will try to compare these 4 digital ecosystems across the following sectors –

2) FinTech

3)Logistics

4) Community

5) Connectivity

Let me directly jump onto how the overview looks like through the table below:

2) FinTech –

FinTech is a very broad term and includes various sub segments which all together will require few more dedicated posts to dissect in detail. However, for our current comparison, we are restricting ourselves to 2 segments —

a) Online Payments b) Payments Bank, others

a) Online Payments –

Online payments segment is seeing a V shape recovery with UPI recording the highest ever transactions volume at 1.49 billion with a transaction value of $41 billion in July 2020. This nos. itself put India at a $500 billion online transactions ARR. Currently, India is ranked 8th in the world in terms of digital transaction and if we see in terms of users, almost 45% of India now transacts online, i.e. 589.5 million users as per the website statista.com. It is predicted that we will reach transaction amount of $1 trillion and user base of almost 930 million in the next 5 years. No wonder, online payments is the mostly fiercely contested space in the Fintech universe with maximum funding going to it historically in India.

In the online payments segment, like grocery segment in commerce sector, all the players have strong presence. Let’s go through them one by one:

Jio –

When it comes to payment space, Jio has 2 stand-alone apps — Jio wallet(online payments platform) and Jio coin(Jio’s crypto currency). Jio wallet is definitely not the popular app for online payments and will have to work really hard to get people transacting on its platform. If we consider, Google and Whatsapp along with Jio, then the combo becomes one of the most potent one in this sector. Google pay is already one of the leading UPI transaction apps and with Whatsapp getting the clearance for Whatsapp Pay, this could take the online transaction to a different level altogether. It will be interesting to see how Jio Wallet, Google Pay and Whatsapp Pay interact among themselves.

Amazon –

Amazon has Amazon Pay which is gaining some traction lately but definitely it is not among the top 3 players in this segment. They need to get more people transacting through their platform. There is a huge scope of improvement for them.

Walmart — Flipkart –

Their spin off Phonepe is one of the leading payments app in India currently leading the leaderboard in UPI transactions frequently. They have been able to capture sizeable customer base in the recent past and have been performing pretty well.

Softbank –

Paytm, the original payments app, which revolutionized payments with its popular Paytm wallet and jingle ‘Paytm karo’ is facing tough competition from Phonepe, Google Pay as well as Amazon Pay and Whatsapp Pay. It remains to be seen how they are able to keep their vast customer base activated as well as loyal.

My Take –

This was, is and will remain the most hotly contested segment even in the near future term with Whatsapp Pay rolling out all over India. Also, one can expect JioPay wanting to add some more customers on their platform. And one of the most obvious way for them is through cashback/discounts/offers. Indian customers are spoilt for choices and hence I don’t see customer loyalty or stickiness towards any one platform as transaction is a commodity. Any platform which gives the maximum offers/discounts will have maximum user traction. However, I do believe Whatsapp pay can have huge unfair advantage here from customer acquisition perspective as people are already there on Whatsapp for majority of their communication. And with their ease of use, making payments here itself is a no brainer for people not looking out for discounts.

Next 12–18 months will be pretty interesting to see how this space plays out.

b) Payments Bank, others –

Under this segment, payment bank is the primary focus and I have included some other verticals where each of the ecosystem has some presence directly or through their investment.

Jio –

Jio launched its own payments bank back in 2018 but haven’t advertised it much. Seems like this is a sleeping giant which is under the hood currently and doing its ground work silently. I happened to dig in a bit into it and found something very interesting — they plan to go offline with Jio Payments Bank Outlets — a little larger than ATM kiosk type store with presence across more than 70,000 outlets. One can expect a big bang true Ambani style entry like what we saw with Jio sim and JioMart previously.

Amazon –

Amazon doesn’t have a payments bank yet but has invested in lending company Capital Float — one of the largest digital lender of India, Bankbazaar — a marketplace for all things lending and investments and Acko — a digital first micro insurance company. The company has strong presence here and can build/invest in a payments bank in future.

Walmart — Flipkart –

Flipkart currently has no presence in this segment and has a good opportunity to build this vertical or buy/invest in some existing company. Definitely, this is something which can’t be ignored.

Softbank –

Softbank companies have the most significant presence in this segment I would say. They have Paytm Payments Bank, Paytm Money — the investment app, Policybazaar — the market leader in insurance marketplace and Paisabazaar — a bankbazaar equivalent.

My Take –

Softbank is the best placed ecosystem currently when it comes to Payments bank and others segment with 2 market leaders in Paytm payments bank and Policybazaar. Amazon has reasonable presence through its investee companies but has no presence in payments bank currently and that remains an opportunity for them. I feel Jio could be the dark horse here once it launches its offline outlets and can capture the Bharat audience really well becoming the ‘Bharat’ people’s bank.

3) Logistics –

Indian Logistics is a $300 billion market with significant inefficiencies creating opportunities for companies to extract value by addressing them. Around 80% of the market is unorganized and is made up of small fleet owners with less than five trucks. The contribution of the road trucking logistics market itself is $150 billion and another $150 billion is contributed by various allied services like fuel cards, toll cards, logistics related credit services, e-commerce and IoT services. Logistics forms the backbone of Indian economy and definitely needs to be modernized as well as made more efficient. Hence, we see all the 4 ecosystems have strong presence here, trying to technologize and improvise it.

Jio –

They have presence here through their own Reliance logistics (they also have a JV with Container Corporation of India) and Jio Motive. Apart from these, they have invested in a AI based fleet management software called Netradyne, a drone based solutions provider company called Asteria Aerospace and a hyperlocal delivery company Dunzo (Google backed).

Amazon –

Amazon has its own arm called Amazon logistics and they also have Amazon Relay.

Walmart — Flipkart –

Flipkart has their in house logistics arm called Ekart which is one of the biggest player in this e-commerce logistics space. They have invested in Blackbuck, one of the largest startup in this a long haul marketplace for trucking industry in India and in Shadowfax, a hyperlocal delivery venture.

Softbank –

Softbank invested in Delhivery last year, a market leader in the express courier delivery space in India. They also have Xpressbees, another ecommerce, cargo logistics player.

My Take –

I think all 4 ecosystems will continue investing and expanding in this sector as logistics is one of the most critical pillars of success for every economy. Currently, they are barely scratching the surface and there is immense potential to revamp this sector ushering in faster, leaner and more timely service for the whole ecosystem. Also, this sector is so unorganized, fragmented as well as huge that no single player can fulfill all the demand and hence it will always have multiple companies.

4) Community — Here, Jio standalone has maximum presence and if we combine that with Facebook, Google and Microsoft then there is no comparison with any other ecosystem. In the messaging segment, Jio has JioChat, JioCall, JioVoice and in AR/VR space they have Jio Holoboard. Now, if we start listing down properties of the Facebook- Google- Microsoft trio then they have 10+ properties like FB, Instagram, Whatsapp, Oculus to name the most popular ones. Jio is already integrating with Whatsapp for JioMart deliveries and we cannot rule out similar integrations in future making Whatsapp a Super app of India. And if this becomes a success then the whole dynamics of the Indian startup ecosystem will change drastically. Amazon, Flipkart and Softbank ecosystems don’t have anything in either of these 3 segments. Also, it would be very difficult in my opinion for either of them to build something from scratch. They probably could acquire or invest in some prominent startup in this space but it will not be easy. I believe this connectivity piece is a huge advantage which the Jio ecosystem has and if leveraged smartly then this alone can change the game completely.

5) Connectivity — This primarily includes Internet connectivity and set top box and related devices. In this sector, Jio is a winner hands down with its Jio Fiber, Jionet Wifi, Hello Jio and Jio Home verticals. On the set top box side, they have Hathway, DEN, GTPL, etc. which capture the direct to home space making them the gatekeeper of what people consume on their traditional TVs. Amazon has Alexa and FireTV in this space but have nothing in the internet connectivity space or even D2H space. Flipkart and Softbank ecosystem also lag big time in this sector and there remains plenty of scope for them to build something or invest/buy one.

That’s my brief on how these 4 ecosystems stack up against each other in the FinTech, Logistics, Community and Connectivity space. Please reach out to me if you are building on any of the opportunities outlined above or you have thoughts on what other opportunities could be created. Also, happy to understand your thoughts on how do you think about this comparison.

I will try and do a similar comparison for other sectors like EdTech, Content, SaaS/Software in the coming articles of this series. Stay tuned.

Part 1 of this series can be viewed here - https://www.dhirubhai.net/pulse/tale-3-digital-ecosystems-india-jio-vs-amazon-part-1-ujwal-sutaria/

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Disclaimer — All the views/analysis in the article above are my personal views and does not indicate views of the firm I work with.