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Reliance Retail Set to Disrupt Amazon, Walmart-Flipkart

The eCommerce competition in India remains fierce

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Reliance Jio office. Source: www.reliancejio.website

Reliance Retail’s upcoming entry into the online retail sector is the biggest challenge for Amazon and Walmart-Flipkart as the Mukesh Ambani-led behemoth is well positioned to create massive disruption in the market, a new report has stressed.

According to the global market research firm Forrester, the online retail sales in India will grow at a five-year CAGR of 25.8 per cent to reach $85 billion by 2023, despite the hiccups of demonetization in 2016, GST in 2017 and the governmental changes in eCommerce policy announced last December.

The time is ripe for Reliance Retail, which operates 10,415 stores in more than 6,600 cities, with 500 million annual footfalls – giving the company the kind of scale required to swiftly launch India-based operations.

“One of the things that will trouble Amazon and Flipkart is Reliance’s history of launching operations via massive discounts,” Satish Meena, senior forecast analyst at Forrester Research, said on Tuesday.

Reliance entered the telecom sector in 2003 with the Monsoon Hungama tariff plan, which brought tariffs for voice calls down to just Rs 0.40 a minute from the existing rate of Rs 2 a minute, followed by the launch of Jio 4G plan in 2016 that dropped data rates from Rs 250 per GB to Rs 50 per GB.

“This kind of discounting can disrupt any market, and we expect something similar to happen in the grocery space during Reliancea¿s launch,” Meena added.

Reliance is fast working on creating the world’s largest online-to-offline New Commerce Platform, according to Mukesh Ambani, Chairman and Managing Director, Reliance Industries.

“Due to the recent changes in eCommerce policy and the restrictions on an inventory-led model for marketplaces with FDI, Reliance Retail is finding a favourable policy environment to launch operations where it can use its existing retail infrastructure to deliver goods to customers,” the Forrester report noted.

Reliance launched the food and grocery app among its employees in April 2019 to prepare for the commercial launch later in the year.

Reliance Retail is the largest retailer in India, with $18.7 billion in revenue during financial year 2019, and it grew at a CAGR of 55 per cent in the last five years.

Reliance Retail had $81 billion in revenue and $9.4 billion in profit during 2019.

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Security guards stand at the reception desk of the Amazon India office in Bengaluru, India, Aug. 14, 2015. VOA

“This gives Reliance Retail access to long-term capital from the conglomerate, which has a presence in energy, petrochemicals, telecom, textiles, retail, and natural resources,” said Forrester.

Reliance Retail also has a portfolio of over 40 brands, from the midmarket to premium segments and including Hamleys (which the company has acquired for Rs 620 crore) and Marks & Spencer.

“These can provide a boost to the fashion and lifestyle segment, which will be the largest category by online spending in the coming years,” said the report.

Reliance launched its mobile business at the end of 2015, and by April 2019, it had over 300 million mobile subscribers a” making it the third-largest player in a short span of time.

Jio is building on these mobile subscribers by investing in related services to create an ecosystem that gives customers access to rich content and payments options.

This ecosystem will be available for Reliance Retail to build on.

To compete with Amazon and Flipkart, Reliance will have to significantly improve the customer experience, both in stores and on its online channel, because discounts and cashbacks will not generate loyalty for online customers a” as we saw in the Paytm Mall case.

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“Removal of discounts may lead to a significant loss of buyers from the platform. The positioning of the Reliance platform and its fulfilment will play a critical role in the fight against Amazon and Flipkart,” emphasised the Forrester report.

The eCommerce competition in India remains fierce.

Amazon has been the most popular online retailer since it surpassed Flipkart in 2016, although Flipkart is still the single-largest online retailer, with 31.9 per cent market share in 2018 (38.4 per cent if you include Myntra and Jabong), closely followed by Amazon at 31 per cent. (IANS)

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Walmart, Flipkart Jointly Invest in Ninjacart Startup: Report

Based in Bengaluru, Ninjacart was founded in 2015 by Thirukumaran Nagarajan, Kartheeswaran K. K., Ashutosh Vikram, Sharath Loganathan and Vasudevan Chinnathambi

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Walmart in Fajardo, Puerto Rico. Wikimedia Commons

Walmart and its Indian arm Flipkart on Wednesday jointly invested in fresh produce supply chain startup Ninjacart, to modernise fresh produce market to benefit consumers, retailers and farmers.

“As a homegrown e-commerce company, it is in our DNA to drive change and solve complex local problems in-house through technology. In Ninjacart, we see a company that shares our values, our pioneering mindset and our commitment to tech-driven innovation that improves life in India,” said Flipkart Group chief executive Kalyan Krishnamurthy in a statement.

With the new agreement, Walmart, Flipkart and Ninjacart aim to offer better access of high quality fresh produce to more retailers and consumers in the country even as they economically empower farmers.

Ninjacart offers business to business (B2B) supply chain infrastructure and technology solutions with traceability feature.

The startup deploys sophisticated supply chain algorithms, harvesting big data, predictive analytics, mobile applications and internet of things (IoT) to propel a just in time supply chain, connecting farmers, retailers, 200 collection centres and 1,200 warehouses throughout India.

Operating paperless, Ninjacart transports up to 1,400 tonnes of fresh produce in a day, forming a link between 44,000 farmer suppliers, 60,000 kirana stores and restaurants.

Ninjacart helps reduce the transit time of produce from farms to store at ambient temperature, slashing cost and lessening food waste in India which lacks cold chain infrastructure.

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Shoppers walk in the parking lot of a Walmart store in Fairfax, Virginia. (Photo: Diaa Bekheet). VOA

With the freshly infused funds, Ninjacart will expand its customer base, geographical reach and learn global best practices to better local fresh produce ecosystem.

Additionally, partnering with Ninjacart will bolster sourcing for Walmart’s Best Price B2B cash and carry stores and Flipkart’s direct online grocery business Supermart.

Krish Iyer, president and chief executive of Walmart India said, “Ninjacart’s focus on direct-from-farm sourcing resonates well with Walmart’s commitment to supporting farmers in India.”

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Iyer said Walmart’s Best Price has set a target to source 25 per cent produce directly from farmers by 2023.

“Ninjacart wants to make food safer and more accessible, while ensuring a fair price for everyone involved. We are excited that Flipkart and Walmart are joining us to make this vision a reality,” said Ninjacart chief executive and co-founder Thirukumaran Nagarajan.

However, no financial details of the investment were disclosed by the retail giants.

Based in Bengaluru, Ninjacart was founded in 2015 by Thirukumaran Nagarajan, Kartheeswaran K. K., Ashutosh Vikram, Sharath Loganathan and Vasudevan Chinnathambi. (IANS)