Mukesh Ambani-led RIL’s new arm JioMart will take on Amazon and Flipkart but with a different warehousing-less strategy aided by a tech acquisition spree.
India’s richest man Mukesh Ambani blew the battle horn to begin the e-commerce battle with Amazon. Reliance Industries Limited launched the eagerly anticipated new e-commerce arm JioMart at the onset of the new year.
Heads Up! Investments and Strategy behind JioMart
- Reliance’s plan to take on Amazon and Flipkart
- The warehousing-less O2O business model
- Jio’s 350 million customers and 20 crore retailers
- Mukesh Ambani’s tech acquisition spree
- RIL’s longterm plan with Jio and JioMart
The new venture will directly rival Amazon and Flipkart in the Indian e-commerce market in the coming times. Mukesh Ambani-led RIL has been on a tech acquisition spree since 2017 with a heavy investment strategy to build up the capability for JioMart.
Run by Reliance Retail, JioMart’s pilot will take place in Navi Mumbai, Thane and Kalyan. As it gradually expands, the e-commerce company will become a digital web linking 3 crore brick and mortar retailers with an estimated customer base of at least 20 crores Indian households.
Mukesh Ambani’s O2O Strategy
JioMart which will initially offer up to 50,000 products has been termed “Desh Ki Nayi Dukaan” (the new store of the nation) by Reliance. However, at the core of JioMart’s strategy is a new model that does away with the Amazon-esque warehousing model. Instead, it will rely on a giant online-to-offline (O2O) marketplace.
In March 2019, RIL investment in logistics platform Grab A Grub and software company C-Square. Reliance’s strategy with JioMart will also heavily rely on latest IT trends like the Internet of Things (IoT), Artificial Intelligence (AI) and Robotics. For this very purpose, Mukesh Ambani has acquired more than 20 tech start-ups in the last couple of years.
Investments behind JioMart
Major startup investments that will play a part in JioMart include drone startup Asteria Aerospace, SaaS firm NowFloats Technologies, AI platform Haptik and also offline-to-online retail enabler platform Fynd. Mukesh Ambani Already owns 51 per cent stake in Asteria Aerospace with a further Rs. 125 crore investment earmarked for 2021.
Reliance’s strategy with JioMart will heavily rely on latest IT trends Internet of Things (IoT), Artificial Intelligence (AI) and Robotics.
Likewise, Fynd became a part of the JioMart strategy in August 2019 with an investment of Rs. 295 crore and another Rs. 100 crore to be added by 2021 end. Similar tech acquisition is also a big part of Amazon’s strategy. Jeff Bezos-led e-commerce giant has investment in 128 companies so far.
Redistributing the Indian e-commerce pie
Under the Ambani family scion, Reliance Industries Limited has gone from strength to strength. Ambani’s personal net worth grew by $ 18 billion in 2019. The businessman successfully diversified RIL from oil and gas major to India’s telecom and retail giant. Similarly, the e-commerce arm JioMart is expected to quickly become a giant player in the sector.
Mukesh Ambani’s Reliance invested $ 50 billion in making Jio the biggest telecom company in India within 3 years. Consequently, the 350 million customers will be directly targeted as prospective JioMart customers. Moreover, RIL’s market value which currently hovers around Rs. 1510 is projected to double over the next four years.
RIL’s market value which currently hovers around Rs. 1510 is projected to double over the next four years.
Furthermore, market estimates opine that Jio (currently accounts for around 1/3rd) and JioMart will make up at least 50% of RIL’s total revenue in the coming years. JioMart’s investment strategy and RIL’s increased digital focus is also part of Mukesh Ambani’s longterm strategy of making the company a debt-free enterprise.