OPINION | Mo Money, Mo Problems (and fewer customers)—Why conglomerates struggle with digital commerce

The organisational differences between digital-first companies and conglomerates is baked into how these companies are structured to make decisions and deploy capital.

- Growth versus profits 

Digital-first companies have permission to prioritise growth over profits, as they operate under different financial expectations. Meesho's massive fundraise rounds came with the explicit understanding that the money would be spent on expansion, and Flipkart's early losses were accepted as necessary investments in customer acquisition. Every decision gets measured against one question: Will this help us grow faster?

Conglomerates face a different reality. When Reliance made their massive telecom bet with Jio, they could justify billions in upfront investment because they identified that India's overpriced, underserved telecom market was ripe for disruption through affordable data. Unlike telecom, the e-commerce market already has established winners with deep pockets and proven playbooks. The digital venture isn't a strategic bet on a new market - it's just one division among many, and it's treated like one. This creates a different risk appetite and different tolerance for experimentation.

- Culture of operation

The cultural differences compound this structural challenge. Startups hire for speed and adaptability. They can pivot strategies within quarters, launch experimental features rapidly, and kill underperforming initiatives without navigating corporate politics.

Conglomerates, bound by hierarchical decision-making and consensus-building across multiple stakeholders, simply cannot match this agility. When Myntra launched M-Now with 30-minute delivery and set consumer expectations, Ajio took months to respond with a 4-hour delivery offering. By the time the decision is made, the market opportunity has often shifted.

- Cultural relevance with customers

The startups have mastered the art of feeling native to how young India discovers, discusses, and shops. It’s easy to witness this. Myntra's Instagram page creates lifestyle aspirations. Blinkit's memes and real-time cultural commentary make grocery delivery feel like a shared experience. These brands feel "alive" - constantly engaging, culturally nimble, and quickly attuning themselves to shifting consumer preferences.

Conglomerate platforms may have professional polish and significant investment in tech infrastructure, but they often miss what matters most: cultural relevance. They operate from the assumption that brand awareness equals engagement. When GenZ flocked to Myntra's FWD for trendy fashion, Reliance's eventual response was bringing back Shein - a platform that had already lost its cultural moment. This cultural fluency becomes a self-reinforcing advantage. Platforms that understand their users can anticipate trends, launch relevant features, and create content that drives organic engagement.

But how can conglomerates compete?

The story isn't entirely one-sided. The conglomerates that found success in digital commerce did so by playing to their unique structural advantages rather than trying to replicate startup strategies. Here are four proven approaches:

* Acquire something that's working and scale it - Tata's acquisition of 1mg is a perfect example. Crucially, Tata allowed 1mg to retain its startup DNA and operate as an independent business unit, preserving the agility and customer obsession that made it successful in the first place. Tata's resources then amplified these strengths by enabling offline clinic expansion and full-stack healthcare services. Instead of competing on speed or cultural relevance, they competed on depth of service and reliability - a strategy that drove revenue to ₹2,500-2,600 crores in FY 2025, nearly tripling from previous years.

* Leverage existing partnerships - Tata Cliq Luxury and Ajio Luxe have found profitable niches in premium segments by leveraging conglomerates' traditional advantages - international partnerships, established brand relationships, and supply chain depth. These platforms work because they offer something mass-market players struggle to replicate: genuine luxury experiences and authentic premium brands.

* Integrate with existing supply chains - Amul operates on the "Amul Model" where they directly integrate with dairy cooperative societies across the country. They procure milk from lakhs of farmers, process it through district cooperative milk unions, and distribute through state marketing federations. This vertically integrated supply chain gives them control over quality and pricing that other players can't match.

* Use existing offline distribution channels - Titan leverages their 1,800+ existing retail stores as fulfillment and experience centers for their online platform. This works because it leverages decades of trust built through the Tata brand name and physical presence. When customers want to buy jewelry or watches - high-involvement purchases where trust matters - they prefer the assurance of a physical Tata store they can visit if something goes wrong. The hybrid model helped them achieve Rs 500 crores in omnichannel sales and increased average ticket sizes across smaller stores.

The insight here is that instead of just competing in horizontal battles where they're structurally disadvantaged, conglomerates can focus on strategies where their existing advantages create real differentiation.

The temptation is to compete directly with startups - match their speed, copy their features, adopt their cultural tone. But this is a losing game. Conglomerates will never out-startup the startups. Instead, they need a fundamentally different playbook that leverages what startups can't replicate: decades of relationships, established supply chains, offline distribution networks, and deep industry expertise.

(Arjun Malhotra, General Partner, Good Capital.)

Views are personal, and do not represent the stand of this publication.