Chennai: The E-commerce world never settles down as companies constantly try to fight it out to stay atop the online retail mountain. Amazon and Flipkart are two known names in India that saw no adversaries other than themselves in the market.
Walmart, in a never-before-seen exchange, brought 77 per cent share in Flipkart for a record $16 billion hoping to overthrow Amazon and become the top most firm in India.
At a time, Mukesh Ambani’s Friday announcement about his company, Reliance Industries Ltd (RIL), rolling out its e-commerce platform to as many as 1.2 million retailers and store owners in Gujarat, is said to pose a challenge not only to the above mentioned majors but also to Paytm Mall that is funded by Alibaba Group. RIL e-commerce arm will also spread nationwide given time.
“Reliance Jio and Reliance Retail will launch a unique new commerce platform to empower and enrich our 12 lakh small retailers and shopkeepers in Gujarat, which are part of the over three crore community in India,” Ambani said at the inaugural function of the Vibrant Gujarat Global summit in Gandhinagar.
Gujarat will kick off the pan-India Reliance e-commerce plans, Ambani said.
The plan
At present, there are RIL has 4,000 Reliance Retail stores, equal number of Jio outlets and around 50 warehouses. Ambani aims to scale it up to 10,000 stores in a short while.
Ambani plans to use Reliance Industries’ sizeable workforce and pockets to adopt an innovative online-to-offline (O2O) model, where a consumer is drawn into making online searches for purchases that are made in a physical store.
According to reports, RIL plans is to consolidate merchants under an e-commerce platform, who in turn, will cater to the demand from untapped markets.
What next?
The statement comes at a time when the firms like Amazon and Flipkart wrote to the government to relax its updated foreign direct investment (FDI) norms.
As per the new norms, FDI-funded online marketplaces can only act as technology platforms that connect independent sellers and buyers. They cannot sell, own or control inventory. Also, the law prohibits such e-commerce platforms from entering into exclusive merchandise deals. The rule will come into place by 1 February.
India’s retail sector is undoubtedly one of the biggest success stories of the last decade. It accounts for more than 10 per cent of the country’s GDP and around eight per cent of employment. India also occupied the first rank in the Global Retail Development Rankings 2017.
Ambani’s move into the segment was mulled over many months and yet, people in the know state that RIL has the ability to take the spotlight away from the majors of the industry.
Industry experts however stated that the move reinforces India’s emergence as an e-commerce powerhouse.
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| According to a study by Boston Consulting Group, India is expected to become the world’s third largest consumer economy with a size of $400 billion in consumption by 2025. Growing disposable income, expanding middle-class and rapid digitisation through smartphone and Internet penetration have contributed significantly to the development of such a scenario, it said.
Another report from PricewaterhouseCoopers stated that the retail market in India is expected to register a 60 per cent growth to reach a size of $1.1 trillion by 2020. This growth comprises both ‘organised retail market’, valued at $60 billion and accounting for only eight per cent of the total sector, while the ‘unorganised retail market’ constitutes the rest. While online retail activity is still less compared to offline, it is expected to be at par with physical stores in the next five years, considering it has grown 23 per cent to $17.8 billion in 2017 and is expected to reach $700 billion by 2020, through B2B e-commerce alone. |