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16 January 2020

Reliance Jio adds online shopping to its growing service portfolio

Reliance Jio has already sparked significant disruption in the Indian telecoms market, setting off price wars and consolidation in its core mobile market, and then expanding aggressively into content, fiber and cloud services (see separate item). Its next venture is into online shopping, with the launch of JioMart, which aims to make it the Amazon of India.

As other etailers, like Japan’s Rakuten, know, the more related services an operator can offer to consumers, the lower churn becomes. Shopping drives connectivity usage, and consumers may then use the same platform for other purposes such as content streaming. The mobile device and the user experience can be enhanced by owning the connection, and both can be harnessed to deliver new services, such as banking or connected home, under the same brand, user interface and bill.

All this makes services very sticky, and Mukesh Ambani – chairman of Jio’s parent company Reliance Industries – has often spoken of the rapid diversification of services he envisages for Jio.

JioMart does not, as yet anyway, adopt the high capex Amazon model of heavy investment in warehouses. Instead, it will rely on India’s vast number of kirana (small retailers), offering them a marketplace solution more akin to food delivery services, or even Amazon Marketplace. Customers will use the JioMart to order goods, and of course there will be an app optimized for the operator’s own mobile devices. The deliveries will be fulfilled from shops near to their homes. Early sign-ups are being offered discounts and free delivery.

The challenge for JioMart will be to persuade small retailers with loyal local customer bases to change their processes, and to give up a cut of their revenue to Jio; and of course, to offer something different to the existing online shopping services, including Amazon itself and Walmart’s Flipkart. Between them, those two account for two thirds of India’s ecommerce revenue. But the regulatory environment is on Jio’s side – new rules last year limit how online-only international retailers can sell their own inventories, while JioMart will be unrestricted.