Will Mukesh Ambani Succeed in JioMart super app?

Mukesh Ambani led Reliance group is embarking on an ambitious idea to merge two of largest spending categories of Indian Consumers – Digital & Retail. JioMart is an innovative business idea in this regard. Reliance is trying to tap into the most popular communication platform (WhatsApp), enabling subscribers to order from neighborhood kirana (mom-and-pop) stores that leverage Reliance Retail’s supply-chain backend.

If executed well, JioMart will be able to create a strong, scalable platform with an extremely high entry barrier. However some of the issues in this Tri-Party Digital Retailing experiment are as under,

  1.  Grocery business yields a meager 13% gross profit margin, which for this business model has to be divided between three participants: Jio, Facebook and kirana stores. Hence even with a 25% market share of online grocery segments by FY25, the available profit pool for the participants will be relatively small.
  2. The sheer number of intermediaries, SKUs and scale of operations create numerous fault lines.
  3. There are established competitors of varying size bringing in various competencies on the table.

The Big Omni-Channel Reliance Retail Setup
Reliance plans to become the largest (more…)

Can Reliance Pull Of the Kirana & Jio Omni-Channel Retail Strategy ?

Decade and Half old Reliance Retail Ltd a subsidiary of Reliance Industries Ltd has been toying with several strategies to make its presence felt in several Hundred Billion Dollar Organized Retailing. In order to connect ~30m kirana stores with its own physical and digital infrastructure, Reliance Retail (RRL) launched the Jio PoS machine in 2019. We’ll now explore how has the market received the next generation online & offline retail business strategy.

Our visits to multiple kirana stores that have adopted the Jio PoS device pointed to healthy penetration in the pilot market. RRL has offered attractive pricing for the PoS device (an initial deposit of sub-Rs 4,000 and no recurring fee). This has aided penetration among kiranas. Note that the PoS devices offered by banks often demand an up-front fee of Rs4,000-10,000 and (more…)