Author(s): Raghu Gopal
Last week, Reliance Retail launched an e-commerce platform for smartphones and electronics, using the brand clout of Reliance Digital. Reliance Retail is part of Reliance Industries, a major Indian conglomerate with interests in energy, chemicals, media, retail and telecommunications.
Reliance Digital, owned by Reliance Industries, is the largest electronics retailer in India — essentially the country's version of Best Buy. It has more than 305 stores and runs 4,530 smaller Jio Points that sell smartphones, appliances and TVs.
Reliance Digital and Jio stores will act as fulfilment centres for the new e-commerce platform, providing it with a significant infrastructure out of the gate.
Reliance Industries has a history of disrupting markets. It owns wireless operator Reliance Jio, which completely altered the Indian telecom sector in short order. Jio's 4G-only service won over 200 million subscribers in less than two years, prompting mergers among the long-entrenched competitors. The operator came out of nowhere to upset companies as large as Vodafone.
In anticipation of the launch of the e-commerce platform, Reliance has been warming up by testing online sales of handsets and some other consumer electronics for its employees for over a year. It announced the online shopping portal in July 2018 at the company's annual general meeting, but it's only now that commercial operations have been launched in India.
Amazon and Walmart-owned Flipkart have been vying for the top spot in India's e-commerce business, a landscape that has the potential to become one of the largest retail markets in the world, thus attracting such major players. Walmart acquired a 77 percent stake in Flipkart earlier in May (see High Stakes in Indian E-Commerce Industry). Meanwhile, Amazon has promised to invest more than $5 billion in its Indian arm.
Smartphones and consumer electronics account for as much as 60 percent of the business for Amazon and Flipkart, so competition from Reliance Retail could have an impact. Reliance will be gearing up to take a sizeable share of online sales of smartphones, TVs and other select products for the upcoming festive season of Diwali, which falls in November this year. Diwali is the Indian equivalent of Black Friday in terms of sales. We expect Reliance to launch competitive deals and offers matching those of Amazon and Flipkart.
Reliance Retail will face tough rivalry from Flipkart, Amazon, Paytm Mall and Xiaomi's Mi online store, which all enjoy a large presence in online sales of smartphones and electronics in India. But as India's largest, fastest-growing and most profitable retail company, Reliance Retail certainly has a lot going for it and we believe it can really make a big dent in the market share of the top players.