August 26, 2019
At Reliance Industries’ 42nd annual general meeting earlier this month, Chairman Mukesh Ambani talked about the New Commerce venture that aims to “completely transform the unorganised retail market, which accounts for 90 per cent of India’s retail industry”. This offline-to-online (O2O) initiative, which has previously been touted as the world’s largest such platform in the works, may be launched in October.
“Reliance Retail is planning to launch its e-commerce venture in two phases – a soft launch around Diwali, and then a full-fledged launch by December-January,” an industry official aware of the company’s plans told Mint, adding that a Diwali Dhamaka launch plan could entail discounts as rolled out by other online retailers.
“This user-friendly digital platform is designed for inventory management, customer relationship management, financial services and other services. This will modernise even the smallest neighbourhood kirana shop to become a future-ready digitised store,” he had said, adding that the company is deploying blockchain, IOT, AI and other new technologies on a pan-India basis for this initiative.
RIL’s retail arm has been working on this New Commerce plan for nearly two years, and according to the Chairman, the beta trials have been successful, showing significant increase in sales and improvement in margins for the participating merchants. Under the O2O model, pioneered by Chinese e-commerce giant Alibaba Group Holding Ltd, a consumer searches for the product or service online but buys it from a physical store. This allows Reliance Retail to not only cater to the local demand but also save logistics costs and enter areas currently outside the purview of online retailers. According to sources, RIL is initially looking at the consumption basket, which includes daily staples, soaps, shampoos and other household items.
To this end, Reliance Retail is now planning to sell its in-house brands in local kirana stores through distributors. The in-house brands include Best Farms, Good Life, Masti Oye, Kaffe, Enzo, Mopz, Expelz and Home One, which cover a range of categories from staples and food FMCG to home and personal care as well as general merchandise. These brands are currently available across its own Reliance Fresh, Reliance Smart and Reliance Market stores.
The advantage that RIL will enjoy is that it is fully home-grown and hence does not have to adhere to the more restrictive FDI regulations that apply to the likes of Amazon and Walmart. The revised norms that came into effect in February bar online retailers from selling products via vendors in which they have an equity interest, and also from making deals with sellers to sell exclusively on their platforms. Also, the inventory of a vendor will be seen as controlled by the marketplace if over 25 per cent of its purchases are from the marketplace entity, including its own wholesale unit.
To test the market and understand consumption patterns per locality, Reliance Retail reportedly plans to offer discounts and offers through text messages to customers.