Shaking up an industry currently dominated by Amazon and Flipkart online services, Reliance plans to expand into the e-commerce space with Jio Mart, a direct-to-consumer website. Already, Reliance’s portals offer almost 50 per cent discounts on popular sugary confections and other holiday staples. Its Reliance Digital website sells Samsung smartphones with as much as 40 per cent discounts.
Reliance will benefit from favorable government policies that currently bar Amazon and Walmart’s local unit Flipkart from featuring exclusive products and owning inventory. This will help Ambani dominate the online retail space, opines Siju Narayan, Chief Experience Officer, RexEmptor Consult LLP in Mumbai. According to him, JioMart has the potential to turn the fortunes of grocery e-commerce majors like Bigbasket & Grofers.
Competing with retail behemoths
However, Reliance will be pitted against formidable giants like Amazon or Walmart who have operating since decades. In comparison, Reliance’s e-commerce operations are relatively new. Its website JioMart was started just a year ago and faces several delivery issues and delay in refunds. Already India’s biggest company with a market capitalization of $185 billion or about 6.6 per cent of India’s GDP, Reliance’s e-commerce venture has increased its clout in the industry. JioMart’s upcoming Bestival Sale will be the season’s biggest grocery sale” and offer large discounts and cashback running through November 8.
Reliance will also offer bigger price cuts on some key items, For instance, the company plans to sell a Samsung S20 mobile for Rs 43,999 against a price of Rs 47,990 announced by Amazon and Rs 69,999 by Flipkart. It will benefit from the pricing rules favoring local companies and allow its website to be more cost-friendly.
Benefiting from government-friendly policies
According to Ankur Bisen, Senior Vice-President Technopak, while JioMart and Reliance Retail account for only $12 billion of India’s retail market, Amazon and Flipkart account for $14 billion each. However, the restrictions on foreign companies owning grocery stores, puts these companies on a backfoot and boosts the prospects for home -grown champions.
Reliance also benefits from the allegiance of its goals with government’s ambitions. In 2016, the company launched Reliance Jio, as part of Modi’s Digital India initiative.
To further consolidate his position in the industry, Reliance recently bought the retail, wholesale, logistics and warehousing units of Future Group for $3.4 billion. Taking the bull by its horns, the company aims to complete the transaction without any further delay.