Volume IconCan Reliance repeat its brick-and-mortar success in e-commerce?

Reliance JioMart is trying to catch up with Amazon and Walmart. This festival season, it started a digital push for all shopping needs. Can Reliance repeat its brick-and-mortar success in e-commerce?



Reliance Retail -- the country’s largest retailer -- has said that during the April-June quarter it recorded 175 million footfalls, which was 19 per cent above pre-Covid levels, and opened 792 stores. Overall, the retailer has 15,866 operational physical stores.  

And the footfalls reflected in the profit too. Reliance Retail clocked a 114 per cent jump in its net profit at Rs 2,061 crore for the April-June quarter compared to last year. The company said that it has delivered its best-ever quarterly gross revenue at Rs 58,554 crore, up 51.9 per cent year-on-year.

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The retailer’s business grew five times over the last year when it comes to luxury and premium brands. This growth was driven by fully operational mall stores and in-store events.

Clearly, the brick-and-mortar segment’s performance played a major role in Reliance Retail’s success. So, can it repeat that success in the e-commerce space, too? US-based research group Bernstein estimates that Walmart-owned Flipkart was leading the Indian e-commerce market with annual sales of $23 billion in 2021. Amazon was the second-biggest player with between 18 to 20 billion dollars of gross merchandises value or GMV last year. GMV is the value of all the goods sold on any platform.
Reliance came next with e-commerce sales of around $4.6 billion. However, Amazon has more sellers at 700,000, compared to Flipkart's 450,000 and JioMart's 300,000. Reliance's competitors also have a wider selection. Amazon has nearly 170 million products across more than 100 categories, while Flipkart has over 150 million products across 80 categories.

It certainly has ambitious plans in this space. JioMart, Reliance Retail's digital commerce platform, is morphing into an e-marketplace. In pursuit of this goal, the company has been onboarding third-party sellers for the past few months, further increasing its offerings across categories multifold.

In August, Facebook parent Meta and Jio platforms also announced the launch of the first-ever shopping experience on WhatsApp. Reliance Retail said that this was a global first, adding that JioMart on WhatsApp would enable users, including those who had never shopped online before, to browse through JioMart’s entire grocery catalog, add products to the cart, and complete the purchase by making the payment – all without leaving their WhatsApp chat.

Reliance Retail is also foraying into the fast-moving consumer goods, or FMCG, space. It is taking its private label brands to general trade. Here, too, the digital platform will play a key role. Dolat Capital VP Sachin Bobade told Business Standard that because of its own distribution through JioMart, Reliance Retail has consumer information. This would make it easier for the company to launch its products and gauge the demand for them.  

There are various strategies Reliance can and may deploy to take on the e-commerce giants. According to Bernstein, Reliance already leads in the e-grocery and online-to-offline categories with its 15,000-store retail footprint and a strong inventory-led model.

Reliance Retail is also rapidly increasing the categories in which it has offerings through acquisitions. It has bought online pharmacy Netmeds and online furniture retailer Urban Ladder. It has also acquired digital lingerie seller Zivame and online grocer MilkBasket. Adding to that, Reliance Retail is reportedly in advanced talks to get the rights for beauty retailer Sephora in India.    

There is a lot of premium on the first-mover advantage in the e-commerce sector. Overcoming this disadvantage will require the successful implementation of Reliance's "retail plus" strategy, wherein Indians will shop in its physical stores or on JioMart, use its mobile and WiFi networks, get their entertainment over Jio Cinema, and pay for all of it using JioMoney. If it can ensure that the consumer never leaves this 'Jio bubble', then competing with the likes of Amazon and Flipkart on an equal footing may very well be possible.

But, even after all of this, the factor that could ultimately make or break Reliance's digital bid may lie elsewhere. Let us go to analyst Karan Taurani

Karan Taurani, SVP, Elara Capital says, Reliance will have to beat Amazon, Flipkart on user experience. Super-app like Tata Neu is the way to go, he says. Investing in technology, superior delivery experience will be the key.

Reliance’s scale and deep pockets lend confidence about its e-commerce ambitions. However, there's many a slip between the cup and the lip. At the end of the day, it really will boil down to beating Amazon and Flipkart at acquiring 'sticky' users through superior experience. That last part remains the real challenge.  

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First Published: Sep 29 2022 | 8:35 AM IST

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