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JioMart: The Disruptor?

“Don’t find customers for your products, find products for your customers”, they say, and truly, those who have always thought about their consumers, are the ones whose products have been the most successful. I would not be wrong in saying that the economic development of any country starts and ends with the consumers of that country. Any consumer-related business can rise to great heights if the creators of that business model cater to the needs of the consumers and provide them with efficient services.

Moving along these lines, Mukesh Ambani has now become the fourth richest in the Forbes Global Rich List 2020 as Reliance Industries’ market capitalisation, including the partly paid shares, topped the ₹13 trillion mark. With the recent rise in the e-commerce sector, Reliance Industries has aimed to extend its reach here, which is in contrast with its previous approach wherein they limited themselves to the oil refinery and petroleum sector. To put this in context, we have to take a look at the facts to see why Reliance Industries is where it is today. In the last few years, the launch of Reliance Jio Infocomm Ltd has been able to attract customers even from other rivals such as Vodafone-Idea, Airtel and other telecom operators in India, with its cheap data plans, free calls, and other exciting features. Due to this, it now has the largest user base in India. The launch of Jio was game-changing for India because it redefined the limits of internet usage.

With its e-commerce platform JioMart, Reliance plans to cause a similar disruption that Jio caused in the telecom sector. The aim is to “completely transform” India’s unorganised retail market of mostly mom-and-pop stores, which account for nearly 90% of the nation’s retail industry. Through this online-offline model, JioMart won’t sell products to the customers directly but instead, it would link the online buyers with offline retailers in their locality.

Reliance estimates that through this platform it would be able to link 30 million offline retailers with 200 million households. The digital platform, unlike other foreign competitors, would link producers, traders, small merchants, consumer brands, and consumers under a common shed. Hence, JioMart is a strategically planned holistic model that aims to usher in opportunities not only to Reliance Industries but also to other people directly linked to the same industry. Moreover, at a time when other ventures of Reliance in the grocery segment such as Reliance Retail and Reliance Fresh, which have a strong offline presence over the country, are doing quite well, we can expect this online platform to be a ‘cash cow’ for the giant. To make them completely digitised, JioMart claims to integrate local kirana (corner) stores and provide them with Points of Sale (PoS) terminals, educate them about inventory management skills, supply chain management, and Goods and Service Tax (GST) compliance.

Analysts and experts are of the view that Facebook’s recent investment in Jio could help JioMart grow. The deal is expected to bear fruits for both the giants. On one side, Jio would gain from the technological expertise that Facebook brings to the table. At the same time, the payments made on the platform through WhatsApp Pay would help the messaging app to overcome the regulatory issues it has been facing. Moreover, Reliance being an already established brand in India would increase the customer base of the Facebook-owned company.

In order to market the online retail platform, Jio has been sending invites to all its users to avail the preliminary discounts. Furthermore, it claims that all its listed products are sold at 5% below the Maximum Retail Price (MRP), this feature is quite similar to DMart’s model that made it quite successful overnight. Additionally, it is still offering the cash-on-delivery option that a lot of existing competitors have stopped. Claims have also been made that JioMart delivers 400,000 orders in a single day which is significantly higher than other grocery home delivery companies. Hence, if JioMart continues working in the same direction, it is bound to give a tough competition to its counterparts.

Following the launch of JioMart, rivals such as Amazon, have started taking steps to maintain their foothold. Amazon has signed a deal with Kishore Biyani’s Future Group to deliver its products. It has also started to broaden the options it provides and has resorted to selective discounting. Amazon has also launched ‘Local Shops’ which has enabled 5,000 offline retailers to set up shop online and has established 10 new warehouses to expand their storage capacity. Additionally, Flipkart said that it would reapply for a food retail license in India. Most importantly, Flipkart has bought Walmart India’s wholesale business in July and is expected to launch a digital marketplace, Flipkart Wholesale in August. So, these already established online platforms have identified the threat being posed by JioMart, and have buckled themselves up.

At present, all that we can expect is that with the launch of JioMart, competitive intensity is likely to increase and nothing can be said about who will win the race. Everything is completely dependent upon who would be able to gain the eyes of more consumers and attract them easily with their lucrative offers, but it also seems to be a stiff competition since both JioMart and other established e-commerce websites are leaving no stone unturned. So, whether established e-commerce platforms retain their place or JioMart takes over is what remains to be seen.

cherry.sharma

Cherry Sharma

I'm a Third-year student of Economics studying at Indraprastha College for Women, University of Delhi. I love to do policy and financial research and prepare reports for them. I am also preparing to pursue Economics at the Post Graduation level.

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