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Why is Reliance industries planning to enter into e-commerce, when they are two giants, Amazon and Walmart-Flipkart is already dominating? Can Reliance make a breakthrough?

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Having raised over $20 billion, Mukesh Ambani is now on a shopping spree in race against Amazon

Flipkart, Snapdeal and Amazon better watch out. Billionaire Mukesh Ambani is planning to invade the e-commerce business by combining the best of online and offline shopping experiences, a business model that will require zero cash burn to acquire customers.

Mukesh Ambani has an ability for classifying an opportunity and disrupting it. He did it with telecom when it launched Reliance Jio. Now, he has his eyes set on an e-commerce opportunity.

As part of the plan being put together by two of Reliance Industries Ltd’s (RIL) consumer-oriented units—Reliance Jio Infocomm Ltd and Reliance Retail Ltd—the company plans to sign on local merchants, boosting their sales through what is known as O2O (online-to-offline) marketplace, A business model that Chinese e-commerce giant Alibaba has founded.

India has $650-billion worth retail industry, only 2-3 per cent is e-commerce, and another 8 per cent is controlled by organised retailers such as Shoppers Stop and Big Bazaar.

Last year, it piloted the project at Mumbai, Chennai, and Ahmedabad. It plans the launch in phases. RIL would partner with 150,000 vendors. It has reportedly tied up with ITC, Wipro, Dabur, Tata Beverages, Godrej Consumer Products, and Amul. It also has partnerships with 40 international brands including Diesel, Brooks Brothers, Gas, Hamleys, among others.

With Jio, we are already digitally connected to a platform of unparalleled capacity and a nation-wide reach. This has enabled Reliance to strategically reinvent itself as a Technology Platform Company.

Below are the problem’s where Jio’s role converges with the strengths of Reliance Retail and able to change the E-commerce Operation.

  • The solid point is that at present, the cost of delivery will be very high, making this unviable. So, you have to create local markets and be present everywhere, where you know the local merchants and local customers and Jio will have to connect them. According to a Reliance executive, the company has an impressive physical presence in the country with 4,000 Reliance Retail stores, about 50 warehouses, and 4,000 Jio points, which will be scaled up to 10,000 over a period of time.
  • Working with kirana(General) stores and consumer brands to create an operational model that will enable shoppers to buy at neighbourhood shops using digital coupons via its Jio Money platform.
  • The app, it is expected, will be a one-stop shop for offline merchants to get on to Reliance’s e-commerce platform; manage their inventory, logistics and supply chain requirements; accept payments and credit money back; and place orders from Reliance’s cash-and-carry or wholesale mega-stores

It remains to be seen, how e-commerce space will take the entry of Reliance. One thing for sure, when it comes to buying, consumers will have a lot of options to choose from. To deliver to the merchants, Reliance has plans to build a logistics network that will be serviced in-house and by third-party logistics providers. Here, too, there will be integration with Reliance retail stores: they will be used as storage points from where delivery boys can pick up and deliver to customers. The kirana(General) stores will also double up as small storage points . That is continuing to help us in our e-commerce venture in a big way as each of them is a touch point to sign up merchants, and act as delivery points.

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