India Markets open in 7 hrs 1 min

Reliance new e-commerce venture to boost 3 crore small retailers: Mukesh Ambani

Sandeep Soni

Asia’s richest man Mukesh Ambani today said that Jio and Reliance Retail will shortly launch a unique “new commerce” platform that will empower as many as 3 crore small shopkeepers in India.

Textiles-to-telecom giant Reliance Industries chairman and managing director Ambani was speaking at the Bengal Global Business Summit today.

The platform, “will bring win-win benefits to consumers, retailers and producers,” Ambani said.

Ambani, last month during an event in Gujarat had announced that, “Jio and Reliance Retail will launch a unique new commerce platform to empower and enrich our 12 lakh small retailers and shopkeepers in Gujarat.”

Reliance currently has near 300 million customers using its Jio service along with 10,000 outlets of its retail arm in over 6,500 cities in India.

E-commerce new third front

With Ambani’s new online venture, Indian e-commerce market led by foreign players including Amazon and Walmart-owned Flipkart is expected to see a dominant third player, according to market experts.

Also read: Why Reliance Mukesh Ambani e-commerce move is nothing like Birla, Tata, Godrej past experiments

Reliance has an ecosystem of entertainment, financial services, payment gateway, etc. Once it has customers hooked on to these services, then it is a question of time before it can start offering merchandise as well, Arvind Singhal, chairman and managing director at retail consultancy firm Technopak told FE Online earlier.

Moreover, unlike Amazon or Walmart, home grown Reliance doesn t have constraints around restrictions on FDI in e-commerce. This might give it a regulatory edge over existing e-commerce biggies.

Retail sector operates between 3-5% of profit and Reliance has been able to maintain that profit. Nobody would have thought that they would pull off something like Jio, said Naresh T Raisinghani, CEO and Executive Director at India division of global consulting firm BMGI.

Reliance s burn rate for new e-commerce venture is also expected to be lower. With near 300 million Jio customers, it won t have to spend on acquiring customers, said Singhal. Also, since the company has a strong EBITDA in the physical retail, it can certainly leverage its sourcing, distribution, supply chain, private label etc., he added.

Reliance Retail s EBITDA increased 20% to 1,680 crore in December 2015 quarter from the preceding quarter.

Ambani’s latest move gains prominence as e-commerce bets by Indian corporates in the past have either failed to reach the size of existing large e-commerce companies or have shut down for instance Aditya Birla s fashion portal Abof.com and omni-channel player Trendin.com, Godrej s e-grocery shop EkStop, Tata Group s TataCliq and Reliance s own Reliancesmart.in and Ajio.com.