Reliance Industries Ltd. plans to take on the likes of Amazon.com Inc. and Walmart Inc. in India’s retail industry by creating a platform that combines online and conventional shopping.
Billionaire Chairman Mukesh Ambani outlined the plan Thursday at the company’s annual shareholders’ meeting in Mumbai saying Reliance saw its “biggest growth opportunity in creating a hybrid, online-to-offline new commerce platform.” The effort will involve the group’s Reliance Retail Ltd. and Reliance Jio Infocomm Ltd. businesses, he said. The latter will also introduce a fiber-based broadband service August 15.
Global retail powerhouses like Amazon and Walmart have been investing in India’s retail industry, where e-commerce sales may more than double to $72 billion by 2022 from $32.7 billion in 2018, research firm eMarketer estimates. The retail-to-refining conglomerate is looking to tap the online market after spending as much as 2.5 trillion rupees ($36.3 billion) in setting up mobile and fiber broadband infrastructure, Ambani said.
Reliance has “crystallized its much anticipated convergence plans,” Jefferies India Pvt. analysts led by Somshankar Sinha said in a report after the annual shareholder meeting. “The centerpiece this year was a peek into its convergence strategy across homes, enterprise & e-commerce premised on its fiber network.”
Walmart, the world’s largest retailer, said in May it will acquire a 77 percent stake in Flipkart Online Services Pvt. for $16 billion, grabbing an asset that had also attracted Jeff Bezos, the world’s richest person, according to the Bloomberg Billionaires Index.
The platform will use augmented reality, holographs and virtual reality to create an “immersive shopping experience,” Ambani said, without giving a timeline or financial targets. The service will be available to small merchants as well, enabling them to “do everything that large enterprises and large e-commerce players are able to do.”
The announcements didn’t enthuse investors. Reliance shares fell 2.6 percent to 964.50 rupees in Mumbai while S&P BSE Sensex ended the day 0.2 percent lower.
Hathway Cable and Datacom Ltd., a provider of cable television and broadband services, plunged 15 percent, its biggest decline since 2010, while DEN Networks Ltd. dropped 10 percent on concern entry of Ambani’s Jio into the industry will intensify competition.
“Whether it’ll be disruptive or how disruptive it could be, will depend on how Jio’s broadband product is priced and packaged,” said New Delhi-based Amresh Nandan, vice president at Gartner India over phone. “If the broadband product comes bundled with content and mobile connection besides attractive pricing, then Jio can capture the attention of users.”
The carrier may look to gain fiber broadband subscribers by offering lower prices and some free services, a strategy that worked for Jio’s phone services.