Reliance Will Make It Tough For Amazon, Walmart; Flipkart Will Open Offline Grocery Stores!
Mukesh Ambani led Reliance Industries Ltd., the largest conglomerate of India has decided to step into the online retail sector and this has created a wave of tension in the Walmart owned Flipkart and Amazon. What we know of Reliance is that it has a strong history of conquering any sphere it decides to step in. It now aspires to enter the online retailing sector, creating India’s biggest offline to online (O2O) platform.
On the similar lines, Flipkart too is planning to open actual stores in the country to sell food. This move to open grocery stores across the country comes after the company opened its 5th online grocery store in Mumbai.
Reliance’s Entry into e-Retail Poses a Threat to Amazon and Flipkart
Reliance has had a history of disrupting any market it has decided to enter into. It always uses its grand package of availing heavy discounts. In 2003, the latter entered the telecom sector with the Monsoon Hungama package, bringing down the tariffs on voice calls to Rs 0.40 a minute from the existing rate of Rs 2 a minute. In 2016, Reliance launched the Jio 4G plan that vigorously changed the scenario of the telecom sector in 2016.
According to a market research report, inspite of the speed breakers like demonetization and changes in ecommerce policies, the online retail sales in India with grow by 25.8% to reach $85 billion by 2023, which is a perfect time for Reliance to enter this market. It operates 10,415 stores in more than 6,600 cities, with 500 million annual footfalls, which means that it needs no additional marketing to advertise its expansion.
Reliance Retail had $81 billion in revenue and $9.4 billion in profit during 2019. Reliance currently has nearly 300 million customers using its Jio service along with, 10,000 outlets of its retail arm in over 6,500 cities in India. Despite of such popularity among masses, Reliance will have to think more than just providing exclusive offers to maintain customer loyalty because we have seen the otherwise results in Paytm Mall.
Flipkart’s Legit Grocery Stores
Walmart owned Flipkart is planning to open grocery stores across the country, into the space of food retail business, where 100% FDI is allowed, unlike the general retail sector. Walmart has very intelligently planned its move and has opened its fifth online grocery store, Supermart in Mumbai.
Walmart is allowed currently only to operate a business-to-business (B2B) wholesale segment in India due to FDI norms to enter the segment in the country, as Walmart specializes mainly into food sector. Setting up of stores will allow Flipkart to take advantage of Walmart’s expertise in the said area.
Food accounts for about two-thirds of India’s total retail market. Walmart’s global competitor Amazon has committed to invest about $500 million in the food retail business through its food retail arm Amazon Retail India, pushing Flipkart further more to exercise its arm in this sector.
Due to the recent changes in eCommerce policy and the restrictions on 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.