Can Reliance Jiomart replicate Reliance Jio success?
BigBasket and Grofers are inventory-based e-commerce businesses, which store and deliver branded items. The two also have several of their own brands.
JioMart, however, only acts as a conduit between shoppers and existing mom-and-pop stores, also known as kiranas. Users can place their orders on JioMart’s WhatsApp number, 8850008000. Once the order is ready, the customer will receive an alert with details of the nearest store from where the goods can be picked up. Payment is done only in cash, but online alternatives will be introduced soon.
The kirana is ubiquitous yet a fragmented entity. Reliance will get to tap into kirana’s wide reach to connect with more consumers and in turn, help them with automation at the backend and scaling up the business. JioMart is bringing together online and offline shopping world in a harmonious manner. With kiranas, it gets easy access to more consumers at no extra cost.
For starters, this model gives JioMart the ready userbase of India’s 400 million WhatsApp users
The wide launch of the service comes after the company began testing its home delivery service in Navi Mumbai, Thane and Kalyan in late April, soon after social network giant Facebook announced it was investing $5.7 billion in Reliance Jio.
JioMart lists fresh food, pulses, packaged food, household cleaning items and pet food among a few other categories of products on its website currently. This is expected to take on online grocery specialists Bigbasket and Grofers, and large e-tailers with grocery delivery plans, such as Amazon Flipkart.
Some of the key features of JioMart are free home delivery, no minimum order value, express delivery, no questions asked return policy and more. Jio claims offers on products available on JioMart will be much better than the competitor and notes consumers will have “savings” like never before.
The service is offering discounts across products and categories, with the website advertising a “minimum 5% below MRP”. In the fresh produce section, JioMart says it sources the items directly from farmers. In packaged food, the website also displays Reliance’s private brands such as Snactac.
JioMart also promises to stock over 50,000 grocery platform for the consumers to buy every necessary daily essential product.
They will also enable kiranas to order from Reliance’s cash-and-carry stores, Reliance Market, to replenish their stocks. This will enable the small businesses to compete with larger siblings from modern retail and other e-commerce platforms, which due to their bulk-buying muscle, get better rates and offers from consumer goods companies and pass them on to the end consumer.
JioMart is available as a mobile and desktop website but not as an app yet. But it is expected to soon become available via Facebook-owned instant messaging app WhatsApp, just as it was for delivery in Mumbai’s suburbs in April. Facebook picked up a 9.99 per cent stake in Reliance Industries’ Jio Platforms worth $5.7 billion. It is expected that the partnership will lead to JioMart using WhatsApp’s Business app to help small businesses reach their customer easily. WhatsApp Pay and JioMoney could also merge in to offer a seamless online shopping experience.
WhatsApp Business has been available in India for quite some time but isn’t as popular as the main WhatsApp personal messaging platform as it is for power users who want to reach out to customers of specific audiences. The JioMart and WhatsApp Business collaboration could boost millions of small and medium sized businesses of the country by offering a single platform for shopping, connecting businesses with customers directly and also helping consumers pay for their orders online using the same platform.
There are several e-commerce platforms available in the country from BigBasket to Grofers to Amazon and more. Given the surge in demand for groceries or daily essentials due to lockdown, many companies such as Zomato, Swiggy, Uber, among others have started delivering groceries at the doorstep. The launch of JioMart in collaboration with WhatsApp could pose a threat to these platforms given the popularity of both the platforms. Jio and WhatsApp together have over 750 million users – a lot of whom will be common.
JioMart won’t need to invest much as it can lean on Reliance Retail’s 10,415 brick-and-mortar stores in over 6,600 cities with access to cold storage and warehousing facilities.
JioMart is replicating the business model of China’s largest retailer Alibaba, which buys products in bulk directly from manufacturers to benefit from economies of scale and then sells them to local retailers. Given its parent company’s deep pockets, this would be an easy feat. Bulk buying will see JioMart negotiate hard on product prices with FMCG manufacturers, who will be more than willing to extend ‘special prices’ to the company as doing so (selling to one player in bulk) will help the latter reduce their inventory management and warehousing costs.
Owning brands earns e-grocers better margins. JioMart has big leverage in this space as Reliance Retail boasts of a bunch of such private labels, including Best Farms, Good Life, Masti Lite, and Freshomz.
People have trust in kirana owners owing to personal and frequent interactions. The local seller, too, is familiar with buyers’ choices and in a position to encourage them to try new products. JioMart will benefit from this.
JioMart has also announced to host a three-day Free Fire Gameathon earlier this week. The company has opened the JioGames Beta home page and interested gamers can register for the Gameathon, which is slated to kick off on October 30 and conclude on November 1.
Free Fire Gameathon has a prize pool of Rs 25,000 and the winning team will get Rs 16,000 as the top prize, the first runner-up team will get Rs 8,000 and there are special Rs 1,000 prize for Most Valuable Player (MVP). It should be noted that all the prize money will be transferred to the player's JioMart Wallet.
This kills two birds with one stone- they are not only heavily marketing their cloud gaming service that is about to release later this year, but they are also marketing and sending business to their JioMart by transferring the prize money to their JioMart Wallets. This will create more awareness about JioMart and will also give them business.
However, experts also warn of the following pitfalls before this business model:
Getting the product-mix right
Catering to kirana customers is not easy. For instance, buyers in East Delhi would prefer a set of commodities and brands that are different from those of shoppers in South Delhi. Accommodating such diversity could be nightmarish. If preferred brands are not available, consumers may drop out. After all, moving to an alternative seller or platform is easy today.
Pricing and revenue sharing conundrum
Given India’s size and diversity of kiranas, the product pricing and revenue sharing model adopted by JioMart would be critical in determining its success. Experts throw a bunch of tricky questions at JioMart: Will, there be standardised pricing across kirana stores? Will there be kirana or customer-specific discounts? Will there be a loyalty programme?
The answers to these will determine JioMart’s success or failure.
You can get the best intraday tips or Bank Nifty tips here to make money in Indian stock market.
You
should Trade Less But Trade Accurately & this is Achieved with our Tip.
