Reliance Retail at the core of mega Jio-Facebook deal; Mukesh Ambani leaps closer to retail dream

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April 22, 2020 1:11 PM

The deal in itself has retail at its core, as both Facebook and Reliance Jio eye a huge market of 1.3 billion Indians and Indian businesses.

Unlike Amazon and Flipkart, Reliance Industries is working with retailers, producers, merchants and small traders at a grassroots level and equipping them with technology.

US-based Facebook has agreed to buy 9.99% equity stake in oil-to-retail conglomerate Reliance Industries Ltd’s telecommunications arm Reliance Jio for Rs 43,574 crore. While the Mukesh Ambani-led company said that Facebook and Jio will together further India’s digital economy, the deal in itself has retail at its core, as both Facebook and Reliance Jio eye a huge market of 1.3 billion Indians and Indian businesses. “Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector,” Reliance Jio said in the statement announcing the deal. In fact, RIL has been building up to become a retail giant with several acquisitions and deals in the past as well.

RIL eyes small traders unlike rivals

Unlike Amazon and Flipkart, Reliance Industries is working with retailers, producers, merchants and small traders at a grassroots level and equipping them with technology such as Point of Sale (POS) Solution as the company plans to take over India’s e-commerce. The company had announced its New Commerce plan during its 42nd AGM meet in 2019. RIL had then said that it sees it as a $700 billion opportunity. 

“New Commerce is a massive new business opportunity of $700 billion… the main purpose of New Commerce is to completely transform the unorganized retail market,” Chairman Mukesh Ambani had said while announcing the company’s plans for India’s unorganised retail industry which is about 80% of the total Indian retail. RIL had then later launched a beta version of My Jio Mart late in December 2019. Further, the company’s initial plans were to build a B2B platform targeted at merchants of grocery, fruits and vegetables stores in the neighbourhood markets, which was later to be connected with MyJio App for providing a B2C interface. 

How Facebook fits into the mix

For Facebook which houses Whatsapp, Instagram and Facebook, the deal with Jio gives it access to Reliance Jio’s already burgeoning user base as the former looks to introduce its payments service via Whatsapp. In a Facebook post, CEO Mark Zuckerberg said: “India is home to the largest communities on Facebook and WhatsApp, and a lot of talented entrepreneurs. The country is in the middle of a major digital transformation and organizations like Jio have played a big part in getting hundreds of millions of Indian people and small businesses online.” Facebook being majorly a tech company can help with digital tools to budding entrepreneurs who need resources to “find and communicate with customers and grow their businesses,” he added.

For Jio too, the deal means that it can further work on its New Commerce business. “WhatsApp already plays an important role in helping people and businesses connect in India. Reliance Retail’s New Commerce platform, JioMart, is being built in partnership with millions of small merchants and kirana shops to empower them to better serve the needs of Indian consumers,” the company said in a statement. For now, JioMart and Whatsapp have plans for bringing customers closer to the nearest kirana stores “by transacting seamlessly with JioMart using WhatsApp”.

In the past few years, RIL has been morphing itself into a predominantly consumer-facing business and Reliance Jio was a further step towards achieving this goal. With Jio, the company not only extended 4G services but has also expanded into online gaming and entertainment via JioSaavn music streaming application. For its retail footprint, the company acquired British toy-maker Hamleys and brought US-based luxury jewellery brand Tiffany to India last year, among other acquisitions and deals. Simultaneously, Reliance’s own retail arm is also flourishing with businesses spread across footwear, jewellery, clothing and apparel.

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