Reliance bets on Jio to expand retail footprint

Mumbai / Tribune News Service

Reliance Retail Ltd is utilizing the delay in launching mobile services by its affiliate Reliance Jio Infocomm Ltd to expand its phone distribution network, two people aware of the issue said.
Reliance Retail Ltd, a unit of Reliance Industries Ltd (RIL), has signed up more than 120,000 modern retailers and 65,000 smaller stores to sell its Lyf mobile phones and e-commerce offerings, these people said.
Reliance Retail, which sells food and groceries to lifestyle and digital products, is seen as struggling even after 10 years of operations. The company currently has 3,245 stores, including 1,748 stores under Reliance Digital, Digital Express and Digital Express Mini brands.
In April, Reliance Retail consolidated two of its grocery formats—Reliance Super mini hyper markets and Reliance Mart hyper market chain under one brand—Reliance Smart. Its value retail business—essentially food and groceries—accounted for 7.8% of its total revenue of Rs.2.76 trillion in 2015-16.
“The plan has always been to integrate the advanced infrastructure built by Jio and physical retail business to create a differentiated model and leverage the reach of retail by the integration of existing digital and cash-and-carry formats into the Reliance digital marketplace platform,” an RIL executive said requesting anonymity. An email sent to Reliance Jio Infocomm remained unanswered.
The Tata group, Aditya Birla Group and even large retail companies such as Arvind Ltd have stepped into online retail as the country’s e-commerce sector grows at a faster pace than physical retail. Different studies estimate the size of online retail at 25-50% of the overall retail
industry by 2020.
In its latest earnings announcement, RIL had said it was integrating infrastructure built by Jio and the physical retail business to create a model with greater reach.
Last year, Reliance Retail piloted online grocery deliveries from Reliance Fresh Direct in Mumbai and Pune, connecting its retail network of Reliance Mart, Reliance Super and Reliance Fresh stores. This April, it launched Ajio.com, a lifestyle and fashion marketplace.
“The blueprint is fairly huge and it will be a daunting task for any single company to pull it off from an execution view point,” said an investment banker, who has engaged with RIL and tracked its projects.
“If Reliance pulls this project off successfully, the impact will be across industries, including e-commerce companies, telecom and retail and media,” he said.
With Jio, Reliance plans to bring all-round connectivity, suitable devices and online services in media and retail.
“The company is creating an entire ecosystem with Jio which comes with its own device, a free sim card, a data plan at one-eighth the rate of those existing in the market at present, own media content, apps such as JioChat and JioPlay besides integration with its retail businesses. This is a very sticky proposition for the consumer and has a tremendous upside as a value creation proposition for the company,” said Amar Ambani, head of research, India Infoline Ltd.
According to him, its scope is unlike anything seen yet and the closest analogy is to that of Google Inc., which is a gateway to the Web for many, and offers a range of services.
RIL has tied up with mobile retailers, including Poorvika Mobiles, Big C Mobile, Lot Mobiles and Sangeetha Mobiles among others. Lyf mobiles are also available on Flipkart and Amazon.
The Jio website, unveiled on 2 June, lists various services and apps such as JioChat, JioJoin, MyJio, JioBeats, JioOnDemand, JioXpressNews, JioMoney and JioDrive. However, it does not offer any details on the launch of its 4G services.
“We are giving free Jio SIM cards with our Lyf phones. This has enabled us to expand our reach to a substantial extent. Most of the retail chains are selling our phones. We wish to have as many users on board as possible before we go for a commercial launch,” said an official from Reliance Jio.
According to a 17 June report by Cyber Media Research and Services Ltd, Lyf was India’s third largest selling mobile phone brand in the March quarter with a 13% market share, behind Samsung and Lenovo.
RIL chairman Mukesh Ambani, who has invested close to Rs.1.5 trillion in his telecom venture, has previously described Jio as the world’s largest start-up.
For comparison, RIL is investing Rs.2 trillion to expand its primary business of refining and petrochemicals.