Adani Group UPI, Adani Group e-commerce, Adani Group credit card

The Gautam Adani-led empire is considering bidding for a payments license for UPI transactions that will enable it to compete with the likes of Walmart-backed PhonePe and Alphabet’s Google Pay, which together hold the lion’s share of India’s digital market.

Is there a business case for Adanis UPI's foray into e-commerce?

Adani Group enters UPI

If you think of Adani Group primarily as a B2B conglomerate – think again. Adani’s focus on consumers is becoming sharper, and its touchpoints with us, the consumers, are becoming broader and deeper.

Firstly… Adani Wilmar – FMCG player; there are also airports and lounges run by Adani; Adani Power that powers homes… and it’s Adani’s NDTV… all operating on the verge of direct-to-consumer.

Recent reports suggest that Adani Group’s latest ventures will pose a challenge to large players in the digital payments and e-commerce space.

Correct. India’s highly competitive digital payments space as well as the ever-growing e-commerce sector are likely to add another player to the Adani group.

The report also states that the Adani Group will enter the e-commerce space by integrating ONDC, or Open Network for Digital Commerce, with its Adani One app, which was launched in December 2022, a month before the Hindenburg Research allegations surfaced.

According to reports, Adani Group will also launch a co-branded credit card that will reward users of all Adani services such as electricity bills and airport purchases.

So let’s take a look at each one individually and see if Adani Group’s foray into the digital economy makes business sense.

The UPI space in India is growing. We are talking about hundreds of billions here.

Last financial year, India saw around 131 billion UPI transactions. On an average, 131 billion transactions occur for every Indian who pulls out that smartphone and transacts more than 150 times a year or virtually every other day.

The total UPI transaction volume last year was around ₹200 trillion or Rs 200 lakh crore! But UPI apps earn very little money. Only 1.1% commission only on transactions over £2,000. As a result, all transactions below ₹2,000 earn the UPI service provider no money.

So does it make sense for Adani Group to enter into a company that isn’t making huge amounts of money? That certainly doesn’t sound like Gautam Adani.

A quick overview of the UPI apps used in India.

Walmart-backed PhonePe and Alphabet-backed Google Pay together occupy 86% of the UPI space in India. The rest is split between Paytm, BharatPe, Cred and others.

So the question is – even if Adani Group looks at the UPI space, will it build it from scratch or buy out a smaller potential rival? Remember that Paytm, which was hit hard by the RBI in January this year, continues to operate as a third-party payment app.

Now let’s get into the e-commerce fun.

The Adani Group launched Adani One in December 2022. So far, it has narrowly focused on travel services such as booking airline tickets, train tickets, hotel rooms and taxis to and from the airport. A Financial Times report states that Adani Group will now integrate ONDC with Adani One and play the full e-commerce game. Remember, Tata Group tried Tata Neu super app and couldn’t compete in the e-commerce market. On the other hand, Reliance Ajio has quickly gained popularity.

The question for Adani, however, is – in a crowded space dominated by global players such as Amazon and Walmart-owned Flipkart, as well as domestic players such as Reliance Ajio – all against the backdrop of a number of not-so-successful startups including Snapdeal and Shopclues – will Adani One , which is already facing competition from MakeMyTrip, EaseMyTrip, Booking.com etc. in the travel space – will it be able to influence the full e-commerce game?

Industry analysts say that if Adani jumps into the new business, at least a lot of publicity can be expected. But ultimately whether it will come down to how much and for how long you invest in your new business idea. Gautam Adani certainly has pockets, but does he have the appetite for D2C? We’ll have to find out.