JUNE 30, 2019 • THE WEEK 10725.8 per cent compounded annual
growth rate.
Reliance Retail has made a
cautious start in online grocery
commerce. Its platform, reliances-
mart.in, is live in Bengaluru, Pune
and Mumbai. Startups Grofers and
BigBasket have continued to scale up
and attract more funding, and Ama-
zon and Flipkart, too, are pumping in
money into grocery retailing.
Leveraging its strong presence
in physical retail will be Reliance’s
biggest advantage in its online play.
“Due to the recent changes in e-com-
merce policy and the restrictions on
an inventory-led model for market-
places with FDI, Reliance Retail is
in a favourable policy environment
to launch operations where it can
use its existing retail infrastructure
to deliver goods to customers,” said
Satish Meena, senior forecast analyst
at Forrester.
Customer experience, however,
could be a key challenge. “Forrester’s
customer experience index showed
that multichannel retailers had
the lowest industry average score
in India in 2018,” said Meena. “To
compete with Amazon and Flipkart,
Reliance will have to signifi cantly im-
prove the customer experience, both
in stores and on its online channel.”
How Reliance can get local traders
together is something to watch out
for. Praveen Khandelwal, secretary
general of Confederation of All India
Traders, which had lobbied hard
against the multinational e-com-
merce players, says the same rules
should also apply to domestic com-
panies. Th e trader body is against
e-commerce companies resorting to
predatory pricing, deep discounting
and exclusivity.
In the past few years, Ambani
has used Reliance’s annual share-
holder meetings to make big ticket
announcements. Last year, Reliance
dedicated a lot of its time on the
upcoming fi bre-to-home broadband
service. Th is year could well be that
ILLUSTRATION: JAIRAJ T.G. of new commerce. ◆Made several
acquisitions and
investments to
strengthen digital
play—Grab a Grub
Services, C-Square
Info Solutions, Haptik,
Saavn and HamleysWill tap into the
unorganised ecosys-
tem of neighbourhood
stores through a point
of sale terminal , which
off ers payment solu-
tions and manages
inventories
from consumer facing businesses in
a decade.
Reliance is not stepping off the
pedal on store expansion. Last
fi nancial year, it opened 2,829
outlets, taking the total to 10,415
stores, covering more than 22 million
square feet space. “Th e two segments
(Retail and Jio) combined delivered
23 per cent of overall EBIT (earn-
ings before interest and taxes) in
2018-19, up from 11 per cent in
2017-18. We expect their contri-
bution to rise to 44 per cent by
2020-2021, transforming RIL to
a consumer-solutions company
from an energy products compa-
ny,” said Probal Sen, analyst at
Centrum Broking.
Currently, digital platforms
contribute only a small amount
to Reliance Retail’s revenues.
But it is scaling it up. Reliance
Brands, a subsidiary, has a portfolio
of some 40 international luxury,
bridge-to-luxury and high-pre-
mium brands. Th ese brands
are being withdrawn from rival
e-commerce platforms and will be
exclusively off ered on
ajio.com, Reliance’s fashion portal.
According to research fi rm
Forrester, online spending among
metropolitan Indian buyers grew
28 per cent in 2018. Smartphones
and fashion accounted for 56 per
cent of the online retail market last
year, so companies are focusing on
these segments. Forrester expects
online retail sales in India to be
around 0 5.8 lakh crore by 2023, at a