Reliance chalks out inventory road map for e-commerce
A late entrant into the e-commerce space, Reliance Industries (RIL) is working overtime to compete with market majors such as Amazon and Flipkart. Targeting a September launch, the group is readying around 50 warehouses across the country for its proposed e-commerce operations, sources indicated. A dedicated data centre in the Bay Area is also being planned for e-commerce.
The big differentiator for RIL will be its inventory-based marketplace model as against the aggregator format followed by Amazon and Flipkart, it is learnt. The inventory model helps an e-commerce player have better control over the products it sells to consumers. While Amazon largely follows an inventory-based model in the US, it had to opt for the aggregator format in India because of policy issues. Currently, foreign direct investment is not permitted in inventory-based e-commerce in India, and recently an expert group has begun reviewing the policy.
Preparation for RIL’s online retail foray has been in the works for around three years, though Chairman Mukesh Ambani made a formal announcement on the new business opportunities, including e-commerce, last week. Now the group is giving the final touches to its plans to connect its 3 million small merchants to cloud-based services, while launching small format fashion stores called Trend Express.
Besides its ready base of 3 million offline merchants, RIL will be able to use its 7,500 stores, 350 million customers, 215 million Reliance Jio users, a well-oiled telecom back-end network, digital money wallet JioMoney, and taxation and inventory management solution JioGST for the e-commerce business, one of the sources quoted above said.
For the specialised fulfilment centres and warehouses, talks are on with some of the big real estate developers.
It has also been in discussions with some of the top delivery and logistics providers in the country to help it start operations by September. While it has operations based in the US and has a team of data scientists for its telecom
operations, the group wants to set up an exclusive data centre in the Bay Area for e-commerce operations.
Among other measures, the company has been adding private labels to its kitty, acquiring controlling stake in some fashion brands. It is in talks with many fashion retail brands to create a separate line of co-branded products to be sold through retail stores called Trend Express. These stores, to double up as sourcing and hyperlocal delivery points, would be spread across tier II, tier III, and the rest of India’s towns.
RIL also plans to acquire smaller tech firms in the run-up to the launch of its online marketplace to quickly on-board technology.
The group has been on a hiring spree already for the e-commerce business. It has tapped many retail chains such as Future Group, Spencer’s, as well as several international brands, for scouting talent.
Inventory-based model
RIL is calling its online marketplace an extension of its brick-and-mortar outreach. Also, there will not be any sellers or vendors on the platform, according to the inventory-based model.
“RIL wants to be the sole supplier of inventory to its merchants, mom-and-pop stores, and retailers all over the country. It would sell inventory through its business-to-business arm, which would be then sold by its merchants offline as well as on Jio’s online marketplace,” said a senior consultant advising Reliance on logistics and supply chain.
Back-end systems ready to go
People in the know said that work on e-commerce had started at the time when it did the soft launch of its telecom network Jio three years ago.
Since then the company has launched many backend and front-end processes to help it digitise its retail services. Launch of the digital wallet JioMoney, tax solution JioGST, and its payments bank have been other key developments in the run up to the online marketplace roll-out.
“The company is creating a digital merchants platform. Enabling merchants to accept money via JioMoney, providing fintech solutions via its payments bank, handling inventory as well as tax through JioGST started over the last two years,” said a source close to the company. It has built almost everything that is required in the backend to smoothly run e-commerce, he said.
Just like Amazon Web Services and Microsoft, RIL plans to add millions of customers to its cloud services platform. And aiming to win the game in e- commerce just like in telecom, the Mukesh Ambani group is planning disruption by making the services ultra-competitively priced.