E-commerce versus Kirana


After the smashing entry of Reliance Jio, Ambani is making another contrarian bet. When retail companies are logging into India, Ambani is betting big on Bharat. Amazon and Flipkart may be putting billions of dollars in e-commerce wars, Ambani plans to ride high on the corner shops—the small kirana stores.

For the retail biggies, the mom-and-pop stores could be dying but for Ambani they are an ambitious business opportunity. For his retail foray, Ambani is neither spending money nor dirtying his hands with delivery issues. All he plans to do is link manufacturers and kirana stores to his Reliance Jio customers and mint money.

Reliance Jio will offer its subscribers digital coupons to buy goods at Kirana stores at discounted rates. It will not spend its own money on discounts. It will only mediate between manufacturers and kirana stores to benefit its subscribers. While manufacturing brands will get free publicity, kirana stores will have more customers. And it will be an effective way to add and retain subscribers for Jio. The company is running a pilot project of this scheme in Mumbai, Chennai and Ahmedabad before it rolls out the scheme next year.

Small kirana stores are seen as a threat by e-commerce companies, but Ambani views them as an opportunity. In an age when the digital and brick-and-mortar are mostly seen as two opposing models, Ambani seeks to combine them in an innovative way using technology, e-cash, coupons and telecom userbase.

Mukesh's father, legendary businessman Dhirubhai Ambani, used to say if you made a phone call cheaper than a postcard, you would revolutionise the lives of millions of Indians. After realising his father's dream by not only making a phone call totally free, but also making a handset, JioPhone virtually free, Ambani is all set to ride the digital revolution.

When he began offering free data to Jio customers last year, Ambani must have realised how telecom could open for him the big doors into the Indian retail market.

Jio's cheap data opened up a vast market for Ambani with which it can play in diverse ways. E-commerce is only 3-4% of India's $650-billion retail industry. Organised retailers hold just 8% of it. Small kirana shops make up the remaining 88% of the market. It is this market that Ambani is accessing through his telecom foray.

Bharat, he knows, is still bigger than India. Rather than trying to pull it online, what Ambani is doing is taking the online shoppers to Bharat, the traditional retail sector, that is. After telecom sector, now the retail players should get ready for a wave of disruption. It's not just retail players who should be afraid of Reliance Jio's new foray into retail. It will give tough competition to digital wallets such as Paytm, Mobikwik and Phone Pe too once it has developed its own retail network

Reliance Retail has plans to compete with Amazon and Flipkart by offering a wide selection of products, (with the promise of) same or next day delivery even in small towns where aspiration level is high but availability is a problem.

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