Even as Reliance’s plan for the Indian ecommerce market gains significant momentum, according to a new report the Mukesh Ambani-led Reliance group is now withdrawing its lifestyle products including apparel and footwear from soon-to-be rival marketplaces i.e. Amazon and Flipkart.
The report cited people aware of the development and said that the process of withdrawal has gathered pace in recent months. The company is looking to maintain the partnerships as well as franchisee agreements till stocks last, but has no plans to renew.
Beyond its retail offerings such as such as Reliance Retail and AJIO, Reliance has around four dozen joint ventures or master franchisee arrangements with international labels including the likes of Diesel, Kate Spade, Steve Madden, Burberry, Canali, Emporio Armani, Furla, Jimmy Choo and Marks & Spencer.
These brands already make Reliance a heavyweight in the apparel category. Notably, many of these brands are sold online on Amazon, Flipkart, Myntra, Jabong and Tata Cliq, among other sites. Reliance Trends and Reliance Brands have been asked to expedite the phasing-out process from non-Reliance marketplaces in the coming weeks.
The report further said that Reliance Brands has been instructed by the head office to stop supplies to third-party marketplaces from this month and sell only on Ajio.com and through branded sites for partner labels.
With the power of global and in-house brands, the company is banking on exclusivity to gain customers. This is especially crucial as its major competitors— Amazon and Flipkart— have restrictions on signing up exclusive partnerships under the amended rules for FDI in ecommerce.
The changes notified in December, which came into effect in February, limit FDI-funded online marketplaces to being mere technology platforms for independent sellers and buyers. They cannot sell, own or control inventory.
But with no foreign investment in its business, Reliance can exercise control over inventory, thereby controlling pricing, quality and speed of delivery.
In July 2018, Ambani announced that Reliance Retail and Jio Infocomm will jointly launch a new ecommerce platform, and the market expects major disruption in the next few months. A recent Deloitte India and Retailers Association of India (RAI) report said that India’s ecommerce market is worth $200 Bn at present and will grow to $1.2 Tn by 2021.
Tapping this opportunity, Ambani had said that the ecommerce plan will be beneficial to consumers, retailers and producers and will also help about 3 Cr small shopkeepers across the country.
The company is expected to follow a hybrid model. Under this plan, the company is aimed at creating shared profitability by integrating the offline stores of small retail players through its online platform.
Reliance Retail is planning to use more than 5,100 Jio point stores across 5,000 cities and towns as delivery and collection points for its ecommerce venture. To further ignite its ecommerce plans, Reliance has already made multiple acquisitions and investments ranging from logistics to vernacular to AI.
[The development was reported by ET.]