India’s largest private sector company, Reliance Industries has been spreading its tentacles all over from petroleum to retailing and there was nothing stopping it from entering the happening segment, online retail. If reports are to be believed, the corporate giant is already taking steps to make an entry and it is trying to first lay its focus on the last mile delivery mechanism.
There are reasons for this too. Firstly, the company has a strong presence in the offline retail space with its Reliance Fresh stores covering grocery to vegetables and home needs and Reliance Trends where fashion and footwear are sold. So, the supply chain and vendor development activities may not pose any problems.
Secondly, the company must have been advised by experts in the field that the real challenge in the online retail business lies in the last mile delivery and managing logistics. Here again, there are two aspects: the physical handling of several thousand orders of different sizes and volumes and more importantly the cost of making those deliveries. These two factors would have sent the team at Reliance looking to set this part of the business in place, before uploading the site with the full functionalities.
It has to take on firmly entrenched players like Amazon and Flipkart and some others who are emerging like Paytm Mall. There are also sector-specific operators like BigBasket and Grofers in the grocery segment and Flipkart’s Myntra and Jabong in the fashion space.
Some areas may have to be reworked. Reliance has warehouses to service the 7,500-odd retail outlets it has; however, that model may not work well with the proposed line of activities. In order to keep these separate, the company will have to make fresh investments and hire more hands. Finance can never be cited as an issue with the Mukesh Ambani led business enterprise.
Some positive factors here are its popular Jio telecom service that can be effectively used to create and spread the apps for customers to download and do shopping. The Jio arm has also invested heavily in different digital technologies, including AI, which could be brought in to help with the online retail business.
Reliance Industries has always believed in disruptive market practices throughout, offering cut-throat prices at launch to capture market share and weakening competition. But the Amazons and Walmarts of this world may not be the same cup of tea as some of the competition Reliance had to contend with, in its other businesses.
For the market pundits, it could be exciting times to watch from the sidelines and comment on the bloodletting.