Even as India goes ‘Vocal for Local, after PM Narendra Modi’s clarion call a few weeks ago, Billionaire Mukesh Ambani has launched his pet project JioMart. Ambani, who is also the country’s richest businessman, calls JioMart as “Desh Ki Nayi Dukaan” and hints at taking global giants Amazon and Walmart (Flipkart) head-on by launching grocery with over 200 towns across the country.
But can it compete with Amazon.in, which has already invested $6 billion in India and created a fairly large and ecosystem by penetrating into the remotest pin-codes of the country?
In my opinion, Reliance Retail has an upper edge in e-commerce now then what it could have had a few years ago. The company has not got into the rat-race of doing a full-stack e-commerce in a hurry but has taken a good amount of time strategizing the pros and cons, getting the logistics and supply chain right and enough private labels so as to fight the foreign players.
Some of the points why JioMart is better positioned are as follows:
B2B Focus : The new FDI rules restricts foreign players (Amazon & Flipkart) from sourcing more than 25% inventory from a single vendor. Since JioMart is owned by Reliance Retail, an Indian company, it doesn’t fall under those guidelines and can source entirely from its B2B company Reliance Smart thus ensuring it doesn’t have to depend on any third-party and can control the pricing the way it wants. So in a way, Reliance has won the B2B game already.
B2C: JioMart is likely to tap on to the Kirana network across the country that will further reach out to JioMart customers for delivery. The inventory to the Kirana stores will be provided by the Reliance Smart. In a way, it is win-win for both Kiranas and JioMart, which doesn’t have to invest much in putting out large warehouses across the country. Supply chain is sorted. This means, if a customer orders, JioMart can deliver from the nearest kirana or Reliance Fresh, Reliance Trends store.
Facebook investment: The recent strategic investment of social media giant Facebook into Reliance Jio, the tech arm of Reliance Industries could also help make JioMart the next ecommerce giant for multiple reasons. The first and most important reason is the ability of JioMart’s customers to order and pay via WhatsApp, the messaging arm of Facebook. The deal between Facebook and Jio also enables each other to tap into each others data in the country. But, we are not sure who takes the responsibility in case of data breach.
COVID: The pandemic has actually turned out to be a great opportunity for JioMart to start its e-commerce foray with grocery or essentials as that is the priority for all the ecommerce players at the moment and are struggling to fulfil the orders. With presence of Reliance Fresh stores, JioMart will have a vantage point in delivering orders in a day through these stores. Currently there is also a free home delivery with no minimum order value, no-questions-asked return policy and an express delivery promise.
O2O: The pandemic also has made people realise that in India Kirana or neighbourhood stores would continue to grow and are going to stay forever. Hence, JioMart’s entry as an Offline-to-Online initiative is likely to link farmers/producers, traders, small merchants, brands and consumers through technology. Reliance Retail’s network of neighbourhood stores, supermarkets, hypermarkets, wholesale, speciality and online stores are added advantage. This strategy would also help in protecting the company’s margins while other e-commerce players continue to burn cash. Reliance Retail aims to connect as many as 30 million neighbourhood stores through this venture.
CASHBACKS: With present situation, it is very unlikely that ecommerce player is looking at offers or cashbacks as the customers are looking for timely delivery. This could put pressure on daily orders for Amazon and Flipkart and Bigbasket if they fail to deliver on time. But JioMart is definitely ought to gain from its competitor’s failure.
CONSOLIDATION: JioMart’s entry is also likely to drive consolidation and intensify M&A activities in the country as several smaller players will find it difficult to survive with already compressed orders and margins.
These are my thoughts, please do let me know what is your view on JioMart.
Will it be able to take-on Amazon in the country ?