Facebook, is now officially part of the Indian ecommerce story where global biggies Amazon and Walmart (through Flipkart) are fighting it out with the Rs 1,30,566 crore homegrown giant, Reliance Retail. Within a week of picking up a 9.99 per cent stake in Reliance Jio for $5.7 billion, Jio has already announced its grocery delivery service through WhatsApp in Navi Mumbai, Thane and Kalyan.
Customers need to add JioMart's Whatsapp number, following which they get a link from JioMart to order through chat. After the customer fills basic details (like address and name), she is directed to the JioMart page (which has 50,000 SKUs). After she completes shopping, her order is directed to the kirana in her locality which fulfils the order. Reliance has been aggressively on-boarding kiranas to not just use them as last mile delivery agents, but encouraging them to manage inventory by using its point of sales machines (PoS).
Facebook, which gets 98.5 per cent of its revenue from advertising, has been exploring the ecommerce space for a while now. Facebook Marketplace for instance, is a sought after platform of small local enterprises. Be it handloom sari sellers, costume jewellery designers or Bihar's Madhubani artists, many micro entrepreneurs find the platform's 385 million user base extremely lucrative. Many also do business on WhatsApp, which has a 400 million user base. Your next door neighbour selling pottery or cakes on WhatsApp is quite common today.
The investment in Jio will now give Facebook's ecommerce ambition enormous scale. "Partnership with Jio could significantly strengthen their product offering. The partnership would enable Facebook to host and control the entire purchase journey of a user on the retail front (start with grocery and later could be extended to medicine distribution, fashion and lifestyle stores, food delivery, etc). The timing of the transaction is opportune too as there is no large established ecommerce player in India which is strong in the O2O (online to offline) model," according to a recent Credit Suisse Report. Reliance has over 26 million square feet of retail space across 11,000 stores (Reliance Digital, Reliance Trends, Reliance Smart, Reliance Fresh and Reliance Mart) spread over 7,600 towns.
It's ecommerce businesses Ajio, Reliancesmart.in and Reliancedigital.in have also started contributing substantial revenue. The new kid on the block is of course JioMart, its online grocery platform.
"The Facebook-Jio deal will bring about a seminal change in the way business is being done. Brands need to take strong note of it and change strategy. It will enable a different shopping experience even at the small grocer level," Kanwaljit Singh, Managing Partner, Fireside Ventures, pointed out in a recent webinar.
Currently, both Facebook and Whatsapp in India, do connect entrepreneurs with consumers, but one can't transact on these platforms. The association with Jio will enable consumers and entrepreneurs to transact on WhatsApp. "WhatsApp business accounts enable a business owner to connect with large user base in order to showcase their products and services. It also helps them to respond to live queries better with the help of various tools offered by Facebook. However, the commerce transactions still happen outside Facebook environment, and this partnership can help Facebook to bring commerce transactions to their platform and complete the user journey.
This is where WhatsApp Pay also supplements this model by providing UPI interface, so that payments can be done without being redirected to a bank's payment gateway. We have assumed here that at certain stage, JioMart could be hosted as a mini-app within WhatsApp (a similar concept to WeChat mini-apps or mini-programs). A mini-app also allows user data to be available to both Reliance and Facebook and this is valuable data for future targeted advertising to these users," the Credit Suisse report further explains.
Similarly, for Reliance, the large user base of WhatsApp could significantly accelerate adoption of the JioMart app. "The key advantage is not only the large base of WhatsApp users in India, but the time spent on the app daily per user. This would 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," says the report. The other big advantage for Reliance would be to leverage Facebook's ability to monetise data through advertising.
In fact, Arvind Singhal, Chairman, Technopak Advisors, expects Reliance to do brand launches on Facebook, WhatsApp and Instagram. "Most consumers discover products on platforms such as Facebook and Instagram, Reliance will make use of it to enable consumer to discover its products."
However, the full-fledged rollout of Jio-WhatsApp service is still a while away. "One has to wait and watch how it will play out in terms of online grocery business. Reliance has been live with JioMart for a while now, but they are not really in the picture now," says Albinder Dhindsa, Co-Founder, Grofers.Vaccine could be ready in 12 months, says Bill Gates; pledges 'total attention' to coronavirus
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