Agencies, Aug 26: Billionaire Mukesh Ambani’s Reliance Retail Ltd could launch its “new commerce” venture around Diwali, three industry officials aware of the plans said. New commerce is Reliance Retail’s offline-to-online initiative, which would link producers, traders, small merchants, brands and consumers through technology.
The company, the retail arm of Reliance Industries Ltd (RIL), has been working on its new commerce plan for nearly two years. Currently, it operates neighbourhood stores, supermarkets, hypermarkets, wholesale, speciality and online stores. “Reliance Retail is planning to launch its e-commerce venture in two phases—one, a soft launch around Diwali, and then a full-fledged launch by December-January. A Diwali Dhamaka launch plan may entail discounts that other online retailers also offer,” said the first of the three officials mentioned above, all of whom spoke under condition of anonymity.
The official said RIL is initially looking at the consumption basket which includes daily staples, soaps, shampoos and other household items. The company is signing up local merchants offering them an online-to-offline (O2O) marketplace, a business model pioneered by Chinese e-commerce giant Alibaba Group Holding Ltd.
Under the O2O model, a consumer searches for the product or service online, but buys it from a physical store. This allows the company to consolidate merchants, who in turn, will cater to the local demand but also help Reliance Retail save costs and enter areas currently outside the purview of online retailers.
“RIL will be using kirana stores for keeping their wares and for last-mile delivery. So, they become part of the supply chain. Also, since Reliance Retail is fully home-grown, they don’t have any FDI regulations to follow. They can keep inventory,” said a retail consultant on the condition of anonymity. Reliance Retail aims to connect as many as 30 million neighbourhood stores through the venture, Ambani said at the company’s annual general meeting on 12 August. To test the market, Reliance Retail plans to offer discounts and offers through text messages to customers . “This is more to study the consumption pattern like who lives where and who buys what,” the second official said.
In July, media reported RIL has initiated a pilot for assisted e-commerce at Jio Stores, wherein store staff will take orders and the customer can collect/return orders from a Jio Store. RIL is also hiring distributors to sell private label brands unit through neighbourhood stores. “They want to leverage a large number of kirana stores as it will be saving on their logistics costs. Besides, RIL is not signing kirana stores as competitors but business associates. If you want grocery in 10 minutes, only your local kirana store can deliver that and Reliance Retail wants to be that for you,” said the second official cited above.