Reliance JioMart starts using WhatsApp for grocery deliveries but model to evolve
Billionaire Mukesh Ambani’s Reliance Industries has started limited test make use of WhatsApp to hook up customers to food markets, days after Facebook made a decision to invest USD 5.7 billion in digital assets handled by the company.
JioMart, an e-commerce venture of Reliance Retail, “has recently started getting together with customers on WhatsApp for grocery orders” in Navi Mumbai, Thane and Kalyan, Credit Suisse said in a written report.
“The client initiates the interaction on WhatsApp, checks out the grocery order on JioMart webpage, gets linked with a shop on WhatsApp and customer accumulates the order from Kirana and pays in cash,” it said, adding the model is probable on delivery and completion of the transaction on one app.
The Facebook deal will help Ambani set up an electronic platform to defend myself against Amazon and Walmart’s Flipkart within an e-commerce market that KPMG says will probably grow to USD 200 billion by 2027.
The deal benefits Facebook via “partnership with the most significant retail player in India, where partnership starts with grocery, and later could be extended to medicine distribution, fashion and lifestyle stores, food delivery, etc,” Credit Suisse said in a report.
Also, Reliance Jio, using its 388 million telecom users, could provide telecom infrastructure for various Facebook’s solutions, it said.
For RIL, the large user base of WhatsApp (400 million) could substantially accelerate the adoption of the JioMart app besides it would leverage Facebook’s experience to monetise data through advertising.
“The key advantage is not only the large base of WhatsApp users in India however the amount of time allocated to the app each day by an average user.
“This might catapult Jio into the attention of the large user base, thereby addressing the first key barrier of awareness post-launch of its New Commerce offering,” Credit Suisse said adding this is based on assumption that at some stage, JioMart could be a mini-app within WhatsApp (a concept similar to WeChat mini-programmes) which would avoid new 400 million downloads of JioMart and give JioMart immediate access to 400 million users of WhatsApp for grocery.
Chances are that the partnership could be extended beyond grocery to other retail products too.
“Deal cash flow would help RIL lower overall net debt and help move towards its target of obtaining zero net debt by March 2021,” it added.
J P Morgan in another report said it believes that at first WhatsApp would be integrating a ‘Jio Shopping bot’ on the API, and invite users to include the bot with their contacts.
Once added, users can visit a local business, see available products in a catalogue, and purchase the product in the thread or in the shop.
The Facebook deal should help accelerate Jio’s capability to further evolve right into a full-stack player across India’s e-commerce ecosystem, it said.
The acquisition of a 9.99 % stake in Jio Platforms Ltd for USD 5.7 billion represents the second-largest investment of Facebook to date (the largest was USD 19 billion WhatsApp acquisition in February 2014).
This corresponds to a quarter’s worth of free cash flows for the firm. “Nevertheless, it still represents a substantial step for Facebook as this might strengthen its evolving business design in commerce,” Credit Suisse said.
