After disrupting India’s telecom market with unlimited data, calls and other freebies, Mukesh Ambani-led Reliance Jio is now placing its bet on e-commerce. As per exclusive reports, Reliance Jio has entered India’s e-commerce space to serve local kirana or grocery stores under its network of retailers and distributors through the app-based platform.
The move is expected to give more choice to customers, while shakes up the existing market led by Amazon, Flipkart, Paytm Mall among others that have adopted their own offline-to-online framework (O2O) business model that draws potential customers from online channels to make purchases in physical stores. Being the latest to enter the race, Reliance will cater to key segments like electronics, apparel, home and furnishing, baby care, beauty and books among others.
At present, Reliance owns 7,500 stores throughout India including Reliance Fresh, Reliance Digital, Reliance Trends, and Jio stores. Through the app, Reliance will also connect these shopkeepers to retail distributors to offer special discounts and help these store owners with the technology required to manage their inventory effectively. Reliance will also connect these retailers with third-party logistics providers to help them deliver goods.
“Reliance is already piloting the app with 5,000 kirana stores in Mumbai and Ahmedabad and expects to roll it to out across merchants the country by the end of the year and scale it up next year,” the report says, noting that Reliance plans to provide assistance in GST returns.
The Boston Global Consulting found that 5% of the purchase made in India’s retail, accounting for 16% of value of India’s retail, is a result of an O2O experience indicating that the O2O model is becoming popular in India. Amazon grew their offline presence in India by acquiring a stake in Shoppers Stop, a leading store across major Indian cities, and they’re continuing with a $5 billion investment to expand its e-commerce. Following that Wal-Mart is becoming the largest shareholder of India’s e-commerce giant Flipkart to expand its grocery business in India. In a more diverse model, Tata Group partnered its multi-brand network of brands from fashion and electronics to luxury products with Unicommerce, a platform connecting it to its own base of over 10,000 local sellers.
Paytm Mall, another online marketplace, backed by Alibaba, facilitates an offline presence by providing a QR code to each device sold. Paytm has been supporting shops lacking scale and resources to provide digital payment options and loans to customers.
With smartphone adoption to increase in India, and people making an increasing number of purchases online, India’s e-commerce market will grow at a 30% compound annual growth rate for gross merchandise value to be worth $200 billion by 2026, predicts investment bank Morgan Stanley. In such a market, it would be interesting to watch how Reliance Jio can make its dent and disrupt the space.