Minority stakes in Glance, Dunzo signal RIL's attempt for retail expansion

Reliance Industries Ltd (RIL) has found a new way to expand its presence in the retail sweepstakes — collaborate by taking substantial minority stakes in retail tech platforms rather than making outright acquisitions as it has done earlier.

This week, the conglomerate announced that it would be investing $200 million (for a 17 per cent stake) in Glance, a mobile lock-screen content company backed by Google (which is also an equity partner in RIL subsidiary Jio Platforms) and run by mobile ad platform InMobi. This investment will enable RIL to offer its services — news, music, entertainment — on the new Jio smartphones.

But Glance is more than a content platform. What the announcement did not mention in detail is that it is among the first to launch “live commerce” in India a few months ago on the same platform — the hottest new way for consumers to buy influencer-led products livestreamed on the platform where you can interact with sellers directly.

A few weeks ago, Reliance also invested $200 million for a 25 per cent stake in hyperlocal delivery platform Dunzo, which delivers groceries and other goods to consumers from small retailers (its B2C business), and offers delivery services to 15,000 merchants (the B2B part). But Dunzo is also changing tack: It wants to become the largest player in the country in “quick commerce”, a disruptive new model that ensures that orders reach homes in less than 15 minutes.

All told, RIL has now picked up minority stakes in retail online platform start-ups with founders leading the game. 

The earlier strategy was mostly via acquisition or controlling stakes. So, it bought home décor and furniture online company Urban Ladder, pharma online platform Netmeds, tech-enabled logistics company Grab, and Justdial, which also has an e-commerce B2B play.

The total investment in all these together has been around Rs 6,000 crore, the bulk of which was for Justdial (Rs 3,497 crore). With the Dunzo and Glance deals, however, it has put in half that amount, investments that have helped Dunzo to see its valuations touch $800 million. The company expects to hit unicorn status in the next round. Glance is already there with a valuation touching $2 billion.

Through Roposo, its entertainment-based live commerce platform, Glance can offer its service to over 163 million active users. With 500 brands already available and over 1,000 sellers and influencers who have signed up, it is rolling out live commerce in phases (in Xiaomi, Samsung, Realme, Vivo device, among others). Now, the service will also be rolled out on Reliance’s new generation smartphones — the first telco with which Glance will have a deal (it expects to sell 60-90 million such phones) — providing customers an alternative model for mobile e-commerce.

InMobi, meanwhile, clearly wants to keep its e-commerce model asset-light. It bought Shop101 to provide it logistics support. But it can supplement that by leveraging the supply chain that RIL has in 200 cities (for grocery), including its warehouses and last-mile delivery infrastructure.

For RIL, the Dunzo deal provides an immediate footprint in the quick commerce business saving it the time and cost of starting from scratch. It also helps Dunzo think bigger — after the deal it raised growth targets 30-40 per cent for this year and a doubling over five years. It will also enter 20 cities with quick commerce instead of 15 planned earlier. Kabeer Biswas, Dunzo CEO and founder, is clear about the benefits he expects from this alliance. “In all cities where we launch quick commerce we can run on top of Reliance’s supply chain in providing delivery to customers,” he said.

The support could go beyond using the supply chain to include RIL’s warehouses in various locations for its own quick delivery services (which requires setting up of dark warehouses within two and half kilometres from a customer).

The collaboration will help RIL utilise Dunzo’s B2B services to deliver their products in less than 15 minutes to its JioMart customers. Unlike competitors Bigbasket, BB Now or Blinkit, earlier called Grofers, JioMart does not have a quick service alternative yet. The deal could also help Reliance’s Netmeds to deliver medicines fast to homes, which could well be a key differentiator against tough competitors such as Tata 1mg.
 

But Dunzo also expects to bring a part of the RIL’s omni-channel traffic on its delivery platform, which is one key area of partnership. And it has targeted to expand that B2B delivery service to 50 cities in 2022. “We decided to go with Reliance because our vision matches for the next 10-15 years. This tie-up will help us build a big, sustainable business together,” Biswas said.

The jury is out on whether the deal would be a big winner for RIL, principally because quick commerce is a new and largely untried concept yet. But according to Bernstein, the financial advisory, the addressable market is huge — $75 billion a year serving 25 million households by 2025, which could well make it the biggest earner of gross merchandise value (GMV) after e-commerce. No large retail player can ignore this potential, which is why virtually all the big boys from Amazon to Flipkart are looking at it. Analysts predict that next-day delivery will soon be dead, and RIL is already on the move.