SUMMARY
RIL’s Aim Is To Create Shared Profitability By Integrating Offline Stores Via Its Online Platform, Reliance Jio
Reliance Industries Limited (RIL), after its successful stint in the Indian telecom sector, is now looking to write a similar success story in ecommerce. The company has reportedly announced its foray into the ecommerce segment with a hybrid online-offline model.
The aim is to create shared profitability by integrating the offline stores of three crore small retail players via Reliance Jio, RIL’s online platform. Reliance is mostly targeting pharmacies and small grocery stores. Plus, it has plans to use JioGigaFibre to bring the entire marketplace to extend fibre connectivity to homes, merchants, and SMEs in 1,100 cities as an initial target.
The announcement was made during Reliance Industries’ 41st annual general meeting (AGM). As RIL chairman and managing director Mukesh Ambani said, he sees the biggest growth opportunity for Reliance Retail in creating a hybrid online-offline market.
“The aim is to blend augmented reality and holographic technology to bring an immersive shopping experience,” he added.
According to reports, the Indian ecommerce logged a total revenue of $25 Bn in 2017, which is projected to grow at 20.2% a year to hit $52 Bn by 2022.
However, it has been observed that online retailers are shifting to omni-channel retail with a focus on physical stores. Also, increased penetration of smartphones and the Internet is further leading to an increasing number of online shoppers.
Reliance Retail opened 3,500 stores last year and aims add 4,000 more this year. Also, its 7,500 stores witnessed some 350 Mn footfall last year.
What Hurdle Could Reliance Industries Face?
Apart from Reliance, Kishore Biyani’s Future Group is also working on a similar hybrid model, Tathastu, under its Retail 3.0 plan. The company also recently acquired a 30% stake in online fashion etailer Koovs.
Talking about the existing players, Flipkart (31.9%) and Amazon (31.1%) hold the biggest market share in Indian ecommerce. Also, Paytm Mall is moving ahead to grab the third spot quite aggressively.
With Flipkart soon expected to officially enter the Walmart camp, factors such as “deep pockets”, “enhanced technology” and “strengthened logistics”, may become obsolete from the comparison matrix.
In such a scenario, customer loyalty will play a crucial role in the success of any ecommerce company, and the companies are already getting ready for this. Flipkart recently announced the relaunch of its customer loyalty programme again while Amazon Prime is offering extra discounts and faster deliveries to its members.
Reliance Industries is not unprepared as well. The company may capitalise on its existing user base of the Reliance Jio platform, which now stands at 215 Mn in less than two years.
[The development was reported by ET.]
