Amazon To Invest In Reliance Retail: Is Big Tech Joining Hands To Conquer India?

Almost a week after Mukesh Ambani announced that Reliance’ will now push for the growth of Reliance Retail, reports have surfaced that Amazon Inc is in talks to buy a 9.9% stake in Reliance Retail.

Amazon wants a preferred, strategic stake in Reliance Retail for JioMart, the report added. However, the value of this deal remains unknown. The reports bring a deja vu to April when Facebook picked up a 9.9% stake in Reliance Jio and the company went on to raise approx $20.2 Bn between April and July. Is Reliance Retail the next Jio?

Reliance Retail, founded in 2006, is the largest retail chain in India. It serves over 3.5 million customers each week through its nearly 10,000 physical stores in more than 6,500 cities and towns in the country.

Speaking at the 43rd annual general meeting (AGM) 2020, Reliance’s chairperson and managing director Mukesh Ambani highlighted that its retail unit has received a “strong interest” from strategic and financial investors. However, Ambani did not emphasise on this topic further.

Reliance Retail had recorded a turnover of INR 1.62 Lakh Cr in the financial year 2020, ending March this year. With this, Reliance has managed to widen its gap with the competitor Kishore Biyani’s Future Group that has an annual turnover of INR 30,000 Cr. Both Amazon and Reliance Retail have also been locked in a battle to acquire a majority stake in Future Retail.

According to media reports, Reliance Industries may also acquire 30% stake in Future Group’s Future Retail’s retail unit Future Retail for INR 6K Cr.

Though Ambani did not mention any elaborate platform for fundraising through Reliance Retail, Morgan Stanley, which served as the financial advisor to Reliance Industries for Jio Platforms’ deals, recently valued Reliance Retail at about $29 Bn. 

Ambani had announced that  JioMart will function closely with WhatsApp to create new opportunities for the local kirana stores and the consumers. He noted that Reliance Jio has successfully piloted the beta version of JioMart Grocery in 200 cities, delivering close to 2.50 Lakh orders daily. Therefore, it now aims to spread it across to other categories as well.

With this, JioMart will be a direct competitor to ecommerce platforms like Amazon and Flipkart, who have marked their presence in all segments except pharmaceuticals. 

JioMart has now enabled a multipurpose point of service (POS) service to enable smooth transactions between stores and their customers. Isha Ambani noted that the grocery delivery platform will further empower and engage kirana stores by allowing them to stay connected with their customers through multifunctional PoS.

Isha Ambani emphasised that the JioMart was built on two fundamental pillars. First, to create a powerful omnichannel tech-platform to unite customers, kiranas and producers. Second, to have a physical network of Reliance Retail that takes benefits of new commerce to every corner.

Amazon always had ambitions of consolidating with a local partner to smoothen its Indian play, but that failed after Flipkart was acquired by Walmart. Hence, with Reliance Retail, Amazon is bound to smoothen its tough times with the Indian government as well to strengthen its ecommerce foothold in the country.