Amazon might have been on a spending spree in India to further strengthen its businesses in the country, but local rivals are not giving up their chances to catch up in one of the world’s largest and fastest-growing retail markets.
Earlier this month, Indian conglomerate Reliance Industries announced the group’s plans to launch a new e-commerce venture, which is expected to disrupt the Indian retail market the way its predecessor Reliance Jio did to India’s telecom landscape. And the plan is seemingly coming into sight.
According to local media report citing people who’re privy to the matter, the soft launch of the new venture will happen in October coinciding with India’s most venerated festival of lights, Diwali. The full-fledged launch is expected around December 2019 or next year in January.
Reliance Retail (RR), the retail arm of Reliance Industries, is India’s largest retailer by revenue and its network is still growing by leaps and bounds. Its FY2019 revenues stood at 18 billion US dollars, with over 10,000 outlets spreading across 6,700 Indian cities and towns.
The traditional retailer’s revenues have primarily come from tier 2, 3, and 4 towns, which would be the main target for its new commerce business too. According to market research company IBEF, the Indian e-commerce market is expected to grow to USD 200 billion by 2026.
The business model of RR’s new commerce offshoot in one of the world’s fastest-growing economies will be a mix of the online and offline formats. A consumer who searches for an item online could, later on, could acquire the same from a brick-and-mortar store. Chinese e-commerce powerhouse Alibaba has been experimenting with this combination of online and offline retailing business through a series of acquisitions of local supermarket chains, for instance.
When it comes to e-commerce, Reliance will have the ‘purely homegrown’ advantage by stocking its inventory across 30 million mom-and-pop stores, known as kiranaor or neighborhood stores in India, which will lead to the save on costs through the consolidation of those shops. RR is seeking to maximize the opportunity from India’s unorganized retail market, accounting for 90% of India’s retail industry worth a whopping USD 700 billion.
Distributors are also being hired to sell private label brands through those kirana stores. Reliance Industries’ 5100 Jio stores will be roped in to double up as the point of sales stores to deliver products as well.
Another edge Reliance will be enjoying, is that it will be able to offer products or services at lower prices than the foreign-funded Amazon and Flipkart, its arch rivals, as they are barred from controlling inventory under foreign direct investment (FDI) rules. Whereas Reliance can control its entire supply chain and inventory of products, devoid of regulation, which will be its other advantage. The product mix is essentially household staples. In addition, Reliance is now withdrawing its lifestyle products including apparel and footwear sold through Amazon and Flipkart.
Reliance Industries is firing all guns to gain supremacy in both the online and offline retail market through multiple acquisitions and investments from logistics to blockchain and IoT technologies. It recently acquired logistics startup Grab A Grub in a cash deal worth USD 15 million to strengthen its logistics services. Through its subsidiary Reliance Jio it has tied up with chatbot maker Haptik Infotech to support technology interfaces.
According to local paper Business Standard’s report, Reliance Industries is also in the works to launch a super app integrating over 100 services to enable e-commerce transactions, online bookings, and payments.
