As Amazon and Walmart-owned Flipkart spend billions to make a dent in India’s retail market and reel from recent regulatory hurdles, the two companies have stumbled upon a new challenge: Mukesh Ambani, Asia’s richest man.
Reliance Retail and Reliance Jio, two subsidiaries of Ambani’s Reliance Industries, said they have soft launched JioMart, their e-commerce venture, in parts of the state of Maharashtra — Mumbai, Kalyan and Thane.
The e-commerce venture, which is being marketed as “Desh Ki Nayi Dukaan” (Hindi for new store for the country), currently offers a catalog of 50,000 grocery items and promises “free and express delivery.”
In an email to employees, accessed by TechCrunch, the two aforementioned subsidiaries that are working together on the e-commerce venture, said they plan to expand the service to many parts of India in coming months. A Reliance spokesperson declined to comment.
The soft launch this week comes months after Ambani, who runs Reliance Industries — India’s largest industrial house — said that he wants to service tens of millions of retailers and store owners across the country.
If there is anyone in India who is positioned to compete with heavily-backed Amazon and Walmart, it’s him. Reliance Retail, which was founded in 2006, is the largest retailer in the country by revenue. It serves more than 3.5 million customers each week through its nearly 10,000 physical stores in more than 6,500 Indian cities and towns.
Reliance Jio is the largest telecom operator in India with more than 350 million subscribers. The 4G-only carrier, which launched commercial operations in the second half of 2016, disrupted the incumbent telecom operation in the country by offering bulk of data and voice calls at little to no charge for an extended period of time.
In a speech in January, Ambani, an ally of India’s Prime Minister Narendra Modi, invoked Mahatama Gandhi and said like Gandhi, who led a movement against political colonization of India, “we have to collectively launch a new movement against data colonization. For India to succeed in this data-driven revolution, we will have to migrate the control and ownership of Indian data back to India – in other words, Indian wealth back to every Indian.” Modi was among the attendees.
E-commerce still accounts for just a fraction of total retail sales in India. India’s retail market is estimated to grow to $188 billion in next four years, up from about $79 billion last year, according to research firm Technopak Advisors.
In an interview earlier this year, Amit Agarwal, manager of Amazon India, said, “one thing to keep in mind is that e-commerce is a very, very small portion of total retail consumption in India, probably less than 3%.”
To make their businesses more appealing to Indians, both Amazon and Flipkart have expanded their offerings and entered new businesses. Both of the platforms are working on food retail, for instance. Amazon has bought stakes in a number of retailers in India, including in India’s second largest retail chain Future Retail’s Future Coupons, Indian supermarket chain More, and department store chain Shopper’s Stop.
Flipkart has invested in a number of logistic startups including ShadowFax and Ninjacart. Amazon India was also in talks with Ninjacart to acquire some stake in the Bangalore-based startup, people familiar with the matter said.
More to follow…
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