Retail

Reliance Industries To Take On Walmart And Amazon In India

The race to be the dominating force in India eCommerce has another massive player entering the field: Billionaire Mukesh Ambani’s Reliance Industries Limited announced its intentions to enter the ring in Indian retail, with a platform designed to create an omnichannel experience for India consumers.

Ambani outlined the plan Thursday (July 5) during the firm’s s annual shareholders’ meeting in Mumbai. He told the gathered that, as of now, given the explosive growth in the sector, Reliance is on the cusp of its “biggest growth opportunity in creating a hybrid, online-to-offline new commerce platform.” To make the platform work, two separate subsidiaries of the firm  Reliance Retail and Reliance Jio Infocomm will work cooperatively. The effort will also be added by the fiber-based broadband service R Jio, scheduled to roll out Aug. 15.

The move comes as Amazon and Walmart have been aggressively expanding their footprint in India, hoping to catch the crest of an eCommerce wave that has become widely anticipated. Some estimates see eCommerce sales doubling in-nation to around $72 billion by 2022 — up from the $32.7 billion forecast for this year.

Reliance — a conglomerate business that touches retail, mobile, broadband and resource refining — believes, having spent 2.5 trillion rupees ($36.3 billion) in setting up mobile and fiber broadband infrastructure throughout India, it is uniquely well-suited to compete in the emerging Indian digital marketplace with its eCommerce platform. According to Ambani, the platform will use augmented reality, holographs and virtual reality to create an “immersive shopping experience.” Reliance’s chairman also noted that the service will be available to small merchants as well, enabling them to “do everything that large enterprises and large eCommerce players are able to do.” What the timeline is, or what the financial target will be, remains mysterious.

Reliance has “crystallized its much-anticipated convergence plans,” said Jefferies India Private Limited analysts, led by Head of India Equity Research Somshankar Sinha, in a report after the annual shareholder meeting. “The centerpiece this year was a peek into its convergence strategy across homes, enterprise and eCommerce premised on its fiber network.”

Still, Reliance’s big plans face rather formidable competition, particularly from two of the biggest names in retail: Walmart and Amazon. Walmart paid a whopping $16 billion to own 77 percent of India’s largest homegrown eCommerce marketplace Flipkart in May of this year, beating out Amazon, which also had its eye on the firm.

“India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market,” Walmart CEO Doug McMillon said in a statement.

Not that Amazon is going anywhere, despite losing out to Walmart on the Flipkart buy. Having been thoroughly shut out of China by Alibaba and Tencent, Amazon CEO Jeff Bezos has committed to investing at least $5 billion in his company’s India business, and has often remarked on the “huge potential” in the country. Amazon has already brought its Prime video and music services to India, as well as its annual Prime Day blockbuster sale, as it has worked to challenge Flipkart.

Now, a new, formidable player has entered the ring. Reliance Jio is already regarded as a massive disruptor within India’s telecom market, pulling in a massive amount of customers particularly in underserved rural areas  with mobile plans that include such desirable goodies as unlimited data, calls and other freebies. While its big eCommerce announcement got a lot of buzz from American media this week, last week it caught the eye of local market watchers with the announcement of a new app-based service designed to help local kirana (small convenience/grocery stores) work within its network of retailers and distributors.

According to reports, the app is meant to be a “one-stop shop” to onboard offline merchants onto Reliance’s eCommerce platform. From the app, merchants will be able to manage inventory, logistics and their supply chain — as well as accept payments and credit money back to consumers. The app will also let merchants sign in to make orders with Reliance’s cash-and-carry or wholesale mega stores. Overall, the app is meant to create an easy touchpoint between Reliance’s retail efforts and digital services.

As of today, a pilot of that platform is live in 5,000 kirana stores in Mumbai and Ahmedabad. It plans to roll it out across merchants nationwide by the end of this year and scale it further next year.

Walmart and Amazon get a lot of attention in the India market — as well they should. But Reliance is an interesting dark horse, unfamiliar to Americans — in India, its various endeavors, particularly in telecom, are well-known, well-liked and increasingly pervasive. And its choice to start small and focus on the neighborhood stores across the Indian subcontinent, where most Indian consumers do at least some of their shopping?

It seems to know its audience well, and is worth watching going forward.

TRENDING RIGHT NOW

To Top