Reliance Jio Aims to Disrupt E-Commerce With Offline-to-Online App for Shopkeepers

Jun. 25, 2018

India’s retail business is gradually transitioning towards a business model which facilitates a uniform experience for the shopper whether they are buying online or offline. Leading e-commerce giants in India are already afoot in the direction of this transition with Amazon, Flipkart, Paytm Mall each adopting their ownoffline-to-online framework (O2O)and the latest bandit entering the race is Reliance Industries with its strong retail channel and with a little boost from Reliance Jio.

Reliance is the strongest organized force in the majorly unorganized Indian retail landscape. It owns 7,573 stores throughout India including Reliance Fresh, Reliance Digital, Reliance Trends, and Jio stores. It now aims to reach out to millions of Indian customers bybringing products closer to the customer. Reliance is building a dedicated app which will serve as a point of sale (PoS) interface for merchants and store partners.

Factor Dailyreports that Reliance will bring localkiranaor grocery stores under its network of retailers and distributors through the app-based platform. The neighborhood shopkeeper will act asan extension to Reliance’s mortar-and-brick stores, and evenstore some inventoryforhyperlocal deliveries. As seen generally, these shopkeepers are trusted by the residents in the locality and this trust is what Reliance banks on for success.

In return, Reliance will help these store owners with the technology required to manage their inventory effectively. It also plans to provide assistance in GST returns. Each of these stores will act as atwo-pronged touchpoint– they will facilitate customers to simply walk in and buy from a variety of products, and serve as pick-up locations where buyers can pay and pick up their online orders.

Through the app, Reliance will also connect these shopkeepers to retail distributors to offer special discounts. Often, theseoffers will be store-specificand will help the shopkeepers to clear out excess stock. Additionally, Reliance will alsoconnect these small-scale retailers with third-party transporters and logistics providersto help them deliver goods not sourced from Reliance Retail.

Reliance’s O2O model has an uncanny resemblance with whatPaytm Mall is doingand what others are trying. While India’s e-commerce industry has been flourishing for years, and has grown sevenfold in the last three years alone, it still only accounts for small percentage of all sales. Naturally, the next big objective is to reach the population of India which is stillalien to the internet.

One of the biggest problems is the trust hurdle, which companies are looking to solve by onboarding shopkeepers who are trusted by non-tech-savvy customers. People also want to be able to see products before buying them, especially those who have never shopped online. An O2O model solves this very problem. They can conveniently shop online and collect goods later, or walk into the store, buy the product and checkout online.

This is primarily whatenchanted Walmart into the massive Flipkart buy-out, and something thatAmazon Indiaand Paytm Mall have been trying to achieve. While Reliance Retail is entering the race later than the others, it enjoys the advantage of a strong user base of 186 million and growing on Reliance Jio. Additionally, Jio’s mobile wallet service,JioMoney, lies at the crux of the company’s retail ambitionsand the wallet will be used to facilitate all payments.

RelianceJio users will also receive promotional offersfor special discounts in the app, which they can redeem at nearby stores. This way, Reliance will also be able to attract more subscribers to its network by offering them indirect benefits.

India is home to 50 millionkiranastores and while only a small percentage have joined hands with other e-commerce giants, these deals will likely come under review and Reliance could snap up defectors with attractive incentives thanks to its higher cash flow.