If you think of Adani Group as primarily a B2B conglomerate – think again. Adani’s consumer focus is getting sharper and its touchpoints with us – the consumers –getting wider, and deeper.
For one… there is Adani Wilmar – an FMCG player; then there are airports and lounges run by Adani; Adani Power that powers up houses… and there’s the Adani-owned NDTV … all operating at the cusp of direct to customer.
Fresh reports suggest that Adani Group’s latest forays will challenge the big boys of digital payments as well as ecommerce.
That’s right. India’s highly competitive digital payments space as well as the ever-growing ecommerce sector is likely to get one more player in Adani Group.
The Gautam Adani run empire is looking at applying for a payments licence for UPI transactions that will enable it to compete with the likes of Walmart-backed PhonePe and Alphabet’s Google Pay that together command a lion’s share of India’s digital market. This as per a Financial Times report. Adani Group is yet to confirm the newsbreak.
The report also says that Adani Group will enter the ecommerce space by integrating ONDC or the Open Network for Digital Commerce into its Adani One app that it launched in December 2022, a month before the Hindenburg Research allegations surfaced.
Adani Group will reportedly also launch a co-branded credit card that will reward users of all Adani services like electricity bills or airport shopping.
So let’s take this one by one and see if Adani Group’s digital economy foray makes business sense.
The UPI space in India is ballooning. We’re talking hundreds of billions here.
India recorded about 131 billion UPI transactions last financial year. 131 billion transactions averages to every Indian popping out that smartphone and transacting over 150 times a year or practically every second day.
And the total volume of UPI transactions last year was about ₹200 trillion – or 200 lakh crore rupees! But UPI apps make very little money. Just a 1.1% commission only on transactions over ₹2,000. So in effect, all transactions under ₹2,000 make no money for the UPI service provider.
So does it make sense for Adani Group to enter a business that doesn’t make tons of money? It sure doesn’t sound like Gautam Adani.
A quick look at which UPI apps India uses.
Walmart-backed PhonePe and Alphabet-backed Google Pay together command 86% of India’s UPI space. The rest is split between Paytm, BharatPe, Cred and other such.
So, the question is – even if Adani Group eyes the UPI space will it build from scratch of buy out a smaller potential rival? Remember, Paytm which was hit hard by RBI in Jan this year continues to operate as a third-party payment app.
Now let’s move to the ecommerce play.
Adani Group had launched Adani One in December 2022. It has so far been narrowly focused on travel services like booking flight tickets, train tickets, hotel rooms, and cabs to and from the airport. The Financial Times report says Adani Group will now integrate ONDC on Adani One and play the full ecommerce game. Remember Tata Group tried a super app Tata Neu and could not compete in the ecommerce market. Reliance Ajio on the other hand quickly gained ground.
The question for Adani however is – with a crowded space dominated by global players like Amazon as well as Walmart-owned Flipkart, plus domestic players like Reliance Ajio – all in the backdrop of many not so successful upstarts including Snapdeal and Shopclues – will Adani One, which, in the travel space already faces competition from MakeMyTrip, EaseMyTrip, Booking.com etc – be able to make a dent in the full ecommerce play?
Industry analysts say if Adani jumps into a new business, at least a big splash can be expected. But eventually if will boil down to how much and how long one stays invested in a new business idea. Gautam Adani sure has the pockets, but does he have the D2C appetite? We’ll have to find out.
The Gautam Adani run empire is looking at applying for a payments licence for UPI transactions that will enable it to compete with the likes of Walmart-backed PhonePe and Alphabet’s Google Pay that together command a lion’s share of India’s digital market. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
