Reliance Industries to debut in e-commerce business

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Reliance Industries to debut in e-commerce business with Mumbai grocery venture by year-end

Grocery will be the sharp edge of Reliance Industries' e-commerce wedge. It plans to offer express deliveries of fresh fruit and vegetables to homes in Mumbai, making it the first such bid to bridge the last-mile connect by a large retailer. India's thirdmost valuable company will make its debut in the e-commerce business with the Mumbai grocery venture by the year-end.
Reliance plans to extend its retail business into e-commerce with the promise of a wider range of goods than currently available online, battling it out with an array of rivals ranging from Flipkart to niche startups, not to speak of Amazon and eBay.
Marketplace venture next fiscal
As for the grocery segment, smaller firms such as localbanya. com and bigbasket.com currently deliver fresh products to consumers in some cities. The grocery venture, which will be run through a subsidiary, follows a successful pilot project at the Reliance Corporate Park office in Navi Mumbai. Over the past year or so, its 10,000 employees there have been buying home care, personal and pharmaceutical products along with food through the Reliance Fresh-Project Direct website.
Later in the fiscal year, Reliance will start selling consumer electronics including mobile phones online. The company's own marketplace venture will start next fiscal, said a person aware of the plan. Amazon has a marketplace model in India, acting as a platform for vendors, as overseas investment in e-commerce isn't allowed.
Flipkart has since adopted the model as have others. Meanwhile, overseas companies are lobbying the government to change the rules and allow foreign investment in e-commerce companies so that they can sell to consumers directly. Reliance Retail dislodged Future Group as the country's largest retailer by revenue earlier this year. Sales rose 34% to Rs 14,496 crore in the year ended March despite India's economy growing below 5% for a second year. The e-commerce plan is part of Reliance chairman Mukesh Ambani's wider strategy, which involves communications venture Reliance Jio being at the intersection of "telecom, web and digital commerce" as he mentioned at the company's annual general meeting earlier this month. A Reliance Retail spokesperson said in an email: "Reliance Retail is looking at bringing a multi-channel shopping experience to the consumers in the coming year and e-commerce is integral to this.
The potential of e-commerce combined with the network of physical store locations will therefore offer choice and convenience at a great value to the consumers." The person didn't elaborate on plans. Reliance will venture into the online space with a new brand name, avoiding those associated with its brick-and-mortar retail business.
"RIL is working on a few specialised e-commerce ventures and a comprehensive marketplace model. Grocery, electronics and apparel will be the specialised sites," said the person cited above. Separate online teams are working on specialised verticals in close tandem with those who look after brick-and-mortar stores, said the person cited above. Apart from Flipkart and Amazon, Reliance will have to contend with other established ventures such as Snapdeal.com, Myntra.com (being taken over by Flipkart) and Jabong.com. India's booming yet volatile online retailing space teems with small to billion-dollar e-commerce firms.
Reliance will be one of the few large corporate houses to venture into the $2 billion annual online retail market, which is expected to quadruple in the next four years. The Reliance strategy is to open with a full range of food and grocery products at competitive prices to stand out amid the clutter. While grocery sales will be rolled out in urban markets one at a time, electronics will be launched nationwide, the person said.
The company is looking to make its consumer electronics and information technology (CDIT) inventory distinct and exhaustive. Ambani had spoken of leveraging the company's investment in retail to take advantage of business potential. "Organised retail in India is witnessing a new surge of optimism. Having invested in retail talent development and state-ofthe-art retail infrastructure, we are in a unique position to capitalise on the growing opportunity in India," Ambani told the company's shareholders.
"In a short period of time, Reliance Retail has achieved market leadership. We will further expand the business in existing markets and explore newer markets and channels while leveraging our solid foundation." Reliance Retail reported profit before depreciation, interest and taxes (PBDIT) of Rs 363 crore for FY14. Reliance is the country's largest store operator with 1,691 outlets of various formats including supermarkets, electronics and jewellery stores occupying more than 12 million sq ft of space in 146 cities.

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