As Mukesh Ambani continues to forge his retail empire with JioMart, his Reliance Industries Ltd is expected to capture half of India’s online grocery market.
As Mukesh Ambani continues to forge his retail empire with JioMart, his Reliance Industries Ltd is expected to capture half of India’s online grocery market. RIL’s partnership with Facebook could result in the company becoming a market leader in the online grocery space, Goldman Sachs said in a report last week, according to PTI, adding that the company is likely to have more than 50% share of the online grocery market by 2024. “Having said that, we do see grocery as a large category for two or more players to co-exist over time,” the report added. As of 2019, Bigbasket and Grofers accounted for more than 80% of the online grocery market, Goldman Sachs said.
RIL had recently announced a stake sale in its telecom arm Reliance Jio to US-based social media platform Facebook as the two companies look to benefit from India’s rising online consumption. While e-commerce in general is expected to witness a boom in the near term, Reliance Industries Ltd’s latest partnership with Facebook will also be a major theme in online shopping. “The biggest near term theme in India internet, in our view, is the foray of Reliance Industries (India’s largest market-cap company with presence across sectors such as energy, telecom, and retail) into e-commerce, and the company’s tie-up with WhatsApp for online grocery,” the report said. Facebook acquired a 9.99% stake in Jio Platforms for over Rs 43,000 crore. RIL’s new commerce venture JioMart looks to deploy Facebook’s WhatsApp to connect grocery stores with nearby customers.
Online grocery as a segment has been witnessing major growth and has reported over 50% on-year growth for the last couple of years. However, coronavirus, coupled with RIL’s entry in the segment is expected to give a further push to online grocery sales. It is likely that during 2019-24, online grocery sales will report 81% CAGR. Meanwhile, e-commerce in general is also expected to boom by 2024 thanks to factors such as better penetration into categories such as grocery/FMCG, improving payment ecosystem and ease of shopping through WhatsApp etc.