Last week, putting rest to speculations, Facebook announced a $5.7 Bn investment in Reliance Jio. Since then, the market is abuzz with speculations over what the duo can bring to the table to mutually benefit and grow in their respective sectors.
The first of such results came when JioMart made a debut on WhatsApp. Now, the buzz is that Reliance may also leverage other platforms like Instagram and Facebook to push its other retail brands like Reliance Trends, Reliance Brands and Reliance Digital.
Meanwhile, a Credit Suisse report, reviewed by us, revealed that Reliance Industries is set to see multiple benefits through its deal with Facebook, but these would take time to accrue. The report noted that while Facebook gets the majority of revenues from advertisements, it is also venturing into ecommerce with Facebook Marketplace, Instagram Checkout, WhatsApp Business accounts, Meesho investment among others.
“Incrementally, the focus is to complete the ecommerce transaction on the Facebook platform, and therefore it is possible that at certain stage JioMart may be available as a mini-app (similar to WeChat),” the Credit Suisse report revealed.
The report added that RIL has several benefits from the deal like “large user base of WhatsApp could significantly accelerate the adoption of the JioMart app; leverage Facebook’s experience to monetise data through advertising; potential access to Facebook’s technology (Oculus VR, Portal, etc.) and deleveraging.”
However, experts noted that the key benefit of the deal is faster adoption of the new commerce initiative on the grocery front. However, one of the roadblocks is to get a significant number of general stores (kirana) partners on board as delivery can then be a low cost.
But beyond onboarding users and stores, the big challenge for ecommerce these days is the fulfilment of orders. Even if companies can be swift enough to onboard kiranas, the last-mile logistics, hurdles due to lockdowns and other issues in the supply chain are major challenges.
Over the past month in the countrywide lockdown, larger players like Flipkart, Amazon, BigBasket, etc have had to face several challenges in even fulfilling their essentials orders. Beyond that, delivery of non-essentials is anyway prohibited. So, even as JioMart looks to sign up kiranas and users, how many orders will be able to serve remains a question.
However, with JioMart’s limited presence in Mumbai, one of the major clusters for Covid-19 patients, its operations in the region will already be limited. JioMart’s expansion has to come in locations which have been designated green zones, but these are limited to the smaller cities. Expansion in the right cities along with onboarding needs to be a major focus of JioMart growth plans.
Inc42 in its analysis of the deal noted that considering the fact that both the companies have a slew of products and services around digital, there is a lot of scope and opportunity for both the parties, beyond WhatsApp payments and JioMart.
With 9.99% stake in Jio Platforms, Facebook wants to leverage Jio’s huge user base to have an easy opening for its services at a large scale. This is also due to the fact that despite India being its largest user base (260 Mn for Facebook, WhatsApp with 400 Mn and Instagram with nearly 200 Mn) Facebook’s revenue in India is very low compared to the global ones.
By bringing the power of Jio as 4G network provider, WhatsApp as a communication system and Facebook for social commerce and JioMart for ecommerce, the duo would tap the largest untapped market of semi-rural and rural markets through kiranas.