Mukesh Dhirubhai Ambani, the Indian billionaire business tycoon, the chairman and managing director of India’s largest private company, Reliance Industries Limited (RIL), which generated a revenue of 66 billion rupees in 2019-2020, seems to be a man in a hurry and desirous. After having grown Reliance Jio into a top telecom player and the country’s largest telecom operator only four years after entering the sector, Ambani is eyeing another major target.
His new goal seems to be to make his retail business-under the leadership of Reliance Retail and now online on the JioMart profile- a top leader in India’s e-retail sector.
In the past few weeks, RIL’s lined up deals have been abuzz throughout the market. One of them is that RIL may soon conclude a deal of Rs 25,000-27,000 crore to acquire a large portion of Future Group’s retail assets. According to reports, the transaction involved RIL’s acquisition of most of Future Group’s fashion and grocery retail divisions-including Foodhall, Big Bazaar, Brand Factory, Nilgiris, Fbb, CENTRAL, and Heritage Foods. Overall, RIL is expected to obtain approximately 1,700 stores across various departments.
Another major move of Mr. Ambani is that on August 18, RIL purchased a 60% stake in online pharmacy Netmeds for 6.2 billion rupees to strengthen its e-commerce position and also increased the number of Jio’s digital healthcare portfolios that it has built behind. This acquisition follows other similar transactions, including an investment of Rs 10 crore in health technology application “KareXpert” and also the acquisition of a majority stake in software solutions company C-Square.
Reliance Industries Strives to Build its Scale in Everything it Does
Harish H.V, the managing partner at E-Cube Investment Advisors, said: We have seen how the company has grown from behind and built capabilities in the telecommunications field. Since its launch in September 2016, in less than four years, Reliance Jio company has become India’s largest mobile telecom operator in terms of revenue and subscribers-as of June 30, it has 389.4 million subscribers, and its revenue for 2019-2020 stood at 68,463 crores. He further added: As far as JioMart is concerned, the company is trying to provide comprehensive packages and services for consumers through a sting of tie-ups.
Reliance Retail said that as of September 2019, it operated 10,902 stores in more than 6,700 cities with more than 24.5 million square feet of retail space. During the lockdown period, the company launched its online portal JioMart.com at the end of May. In July, it launched the JioMart app, which had surpassed 1 million downloads by the end of the month.
Although Covid-19 has harshly hit the retail business, as more and more people order products and fresh goods online, the e-commerce business has been attracted to a certain extent. A study by the supply chain company Unicommerce pointed out that India’s e-commerce has not only resumed, but it has also increased by 17% compared to the order volume before lockdown.
A report by Deloitte and the Indian Retailers Association stated that the country’s e-commerce market was valued at US$24 billion (1.7 trillion rupees) in 2017 and will jump to US$84 billion (6.2 trillion rupees) by 2021.
While RIL recently announced its first-quarter results, it said that its e-grocery business orders soared to more than 4,10,000 per day, which it claims is higher than any other grocery delivery company. JioMart’s goal is to provide goods in 200 cities across the country, which is said to be its USP.
Experts say that JioMart’s advantage over rivals Amazon and Walmart’s Flipkart is that it can use Jio’s mobile network to reach out and attract consumers. Harish said that the acquisition of Future Group’s business will be additional, but not a game-changer for the business. He added: “Competitors such as Amazon and Flipkart have established a firm foothold in the market and have strong financial resources.” He emphasized the stiff hurdles, competition, and challenges ahead for RIL in e-commerce.
JioMart is also building thousands of local Kirana stores (traditional grocery sellers) through its e-commerce network to expand its scale. By joining the Jio platform, these Kirana stores will become part of the integrated digital supply chain, which will enable them to source provisions from RIL’s supermarket chain Reliance Mart. In addition to visiting the store normally, their customers can also contact them through the JioMart app.
The RIL official explained: A point-of-sale device will be provided to the owner of the Kirana store to track their sales. If the store’s specific product has insufficient power, the store owner can order fresh supplies from the nearest Reliance store or Reliance Mart. In the future, the company expects that Kirana stores will fulfill most orders placed on the JioMart platform instead of the Reliance fulfillment centers.
The Kirana store loses money because although customers are fine to make small purchases with them but when they want to make more substantial purchases, they will go to organized retail stores like Big Bazaar or D-Mart.
In addition to this, Kirana Store cannot offer huge discounts like organized retail stores. However, when Kirana stores join the Jio platform, they will be digitized, can accept orders online, and the price can be comparable to offers provided by Reliance Mart.
Buyers who purchase from the Kirana store through the JioMart platform will have multiple digital payment options, such as online net banking, JioMoney, Sodexo, Paytm, etc., and can also choose an option to pay in cash when the order is delivered.
At the same time, India’s largest private company, Reliance Industries is betting heavily on the latest data revolution via Jio Platforms to remould itself from a behemoth in traditional business areas such as petrochemicals and petroleum into an agile and futuristic enterprise, thus attracting investment from worldwide investors. Jio Platforms, a subsidiary of RIL, has been stitching up agreements with global giants including Google, and Facebook and raised approximately Rs. 1.6lakh crore rupees ($20.2 billion) from 13 investors in the four months from April to July by selling 33% of shares cumulatively.