After changing the face of Indian telecom industry, Mukesh Ambani led Reliance Jio is now planning to foray into the e-commerce sector to take on giants like Amazon and Flipkart. As per recent reports, Jio is joining hands with offline stores and brands to offer digital coupons to its users which they can use to get discounts at their neighborhood stores.
It is to be noted here that Reliance Jio had earlier entered into e-commerce with AJIO, an online fashion store. Now, according to an Economic Times report citing two persons aware of the matter, Reliance Jio is working with local Kirana stores, and consumer brands to create an online-offline hybrid marketplace.
The company plans to create a model that will allow shoppers to buy at local stores using digital coupons via its Jio Money platform. A pilot project for this is already going on in Mumbai, Chennai, and Ahmedabad and it may rollout likely next year, the persons told ET. Also, Jio has tied up with brands like ITC, Wipro, Dabur, Tata Beverages, Godrej Consumer Products and Amul to name a few.
It is worth mentioning here that Reliance industries also has more than 3,000 outlets under Reliance Retail. So, this online-to-offline business model will not be quite tough for new digital entrant like Jio. India’s retail industry which estimates $650-billion currently gets only 3-4% of its share from e-commerce and another 8% is controlled by organized retailers. The remaining 88-89% of the market still depends on the local stores, which is why Jio is eyeing this new business model.
If we talk about e-commerce again, it is found that most Indians have got Internet-ready phones over the last couple of years. So, it will take time for the new Internet users to get comfortable shopping in online space. According to a Bloomberg report citing Morgan Stanley’s research, even after getting access to the Internet for more than five years, only 20 percent of Indians are likely to transact online, but still they will not buy new stuff and it will take another 5 years to be a good number of online shoppers in India.
Source: Bloomberg
Coming to Jio, which has added 132 million subscribers on board in about a year, with its entry into e-commerce may put other companies into tough competition. With its online-to-offline model, other digital payment companies like Paytm and PhonePe that are also getting into collaborations with corner stores will face direct competition. Moreover, e-commerce giants Amazon and Flipkart are also investing a significant amount in their grocery delivery businesses.
Reliance Jio’s e-commerce business model has not been finalized yet and it may incorporate some changes and additions after the ongoing pilot project wraps up according to one of the persons mentioned above. However, when the company will roll out this strategy, the ongoing e-commerce battle between Amazon and Flipkart in India will see another strong contestant.
