RIL's e-commerce business may turn out to be more than an online play

RIL's e-commerce platform was announced by chairman Mukesh Ambani at the Vibrant Gujarat summit on Friday

The e-commerce business of Reliance Industries (RIL) may not be disruptive just for the online majors, but could make the entire retail industry across B2B and B2C—acronyms used to describe the wholesale and mass retail operations — sit up. 

E-commerce majors from Flipkart to Amazon, cash and carry players from Metro Cash & Carry to Walmart, and domestic giants such as Future Group to neighbourhood mom and pop stores, the latest entrant would possibly have an impact on all of them. 

RIL’s e-commerce platform, announced by chairman Mukesh Ambani at the Vibrant Gujarat summit on Friday, would use the company’s offerings such as JioMoney, JioGST and Jio Payments Bank effectively to bring in a large ready-made customer base from the Jio universe on to the online shopping platform, analysts said. The idea is to exploit the entire retail ecosystem the group has—7,500 retail stores with an estimated 350 million customers, 215 million Jio subscribers and more than 3 million merchants in the B2B business. 

Taking off with a PoS machine

The group showcased its PoS (point of sale) system on Saturday as a first step towards launching the e-commerce portal. It wants to sell over a million handheld PoS machines in Gujarat itself as it’s targeting to rope in around 1.2 million small retailers in the state through the e-commerce play. 

“The company is first going to get all its logistics in place. Small retailers play an important part in the process. That is why PoS devices are a starting point,” said a source close to the firm.

Available at a refundable security deposit of Rs 3,000, these PoS machines would help retailers get hooked to Reliance’s larger retail ecosystem from where they do things — order inventory, accept digital payments, get data base of regular consumers, be part of Jio’s offers and awards programmes, as well as secure easy short term loans. The company is also giving a 56-day free data pack with the device. The company has launched a pilot across six cities.

Reliance, which is calling its online marketplace an extension of its brick and mortar outreach, would not have any sellers or vendors on the platform and would follow an inventory-based model. Instead of relying on sellers, the way players such as Amazon India and Flipkart function, the company would supply inventory to all its stores as well as offline merchants all over the country. 

JioMoney's role

With the e-commerce platform, services such as JioMoney and JioGST are set to get a boost. “Most of the transactions would be hinged on JioMoney, which means that traction on the wallet is set to increase. This would pose a serious challenge to players such as Paytm as Jio would provide a holistic service and it would have a reach which goes beyond that of Paytm,” said a source who is part of Reliance’s project.

Expansion plans

The company plans to expand to 10,000 stores in the next two years and would use them to make delivery of groceries hyperlocal. Along side, it wants to gradually take its merchant base to the cloud for better logistics and inventory management. It seems getting more merchants to the cloud would be critical for scaling up the e-commerce business, and taking on competition.