Reliance has started testing its online shopping portal days after Facebook said it would invest $5.7 billion (Rs. 43,574 crores) in digital assets controlled by the company's billionaire Chairman Mukesh Ambani. JioMart, an e-commerce venture of Reliance Retail, is serving users in three neighborhoods surrounding Mumbai, according to the JioMartLite website. The shopping app is available via Facebook's WhatsApp in India, which is under the world's most expansive lockdown. The messaging app has about 400 million users in the country.
The starting of the portal takes Ambani, Asia's richest man, a step closer to his goal of setting up a digital platform to take on Amazon and Walmart's Flipkart in an e-commerce market that KPMG says is likely to grow to $200 billion (roughly Rs. 15.22 lakh crores) by 2027. Facebook has said it expects the partnership with JioMart will help make WhatsApp the primary way small businesses connect with customers.
“The roll out is happening during the toughest of times considering the supply-chain constraints,” said Vikraman PN, senior consulting partner of Finnoviti Consulting. “But Reliance will spread the pilot run in various states following its deal with Facebook. And WhatsApp will play a critical role in JioMart's expansion.”
By adding JioMart's WhatsApp number 8850008000, customers can get a JioMart link to place an order that will be shared with a local grocer. The customer is then notified via WhatsApp when and where to pick up the items, according to JioMartLite's website.
The platform intends to deploy the tiny mom-and-pop retail outlets known as kirana as delivery points. Amid restrictions on movements aimed at containing the spread of the new coronavirus, the stores have been thriving, according to consultant McKinsey & Co.
Grocery purchase frequency at such shops has jumped 39 percent since the outbreak began earlier this year, the most among India's food retailers, McKinsey estimates.
A Reliance spokesperson declined to comment.
In a statement delivered by video on April 22, Ambani said the tie-up with WhatsApp will help almost 30 million Indian mom-and-pop store owners to take digital payments from customers in their neighborhoods.
“This means all of you can order and get faster delivery of day-to-day items from nearby local shops,” he said.
Reliance Industries' shares jumped as much as 4.1% Monday in Mumbai. The stock has fallen about 3.2 percent this year, compared with a 23 percent slump in the benchmark S&P BSE Sensex index.
JioMart's model has some key advantages over its biggest competitors, said analysts at Sanford C. Bernstein, in a country where the law effectively blocks ecommerce platforms from owning their inventory.
Reliance “has inventory control driving better pricing, customer experience & stronger control on logistics,” Bernstein analysts including Rahul Malhotra wrote in an April 23 note to clients. “The recent launch of the grocery app JioMart is built on the strengths of its inventory-led model.”
© 2020 Bloomberg LP
How are we staying sane during this Coronavirus lockdown? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts or RSS, download the episode, or just hit the play button below.