Reliance Quietly Enters e-Commerce Fray, Competition May Get Exciting Soon!

This ‘developing’ nation’s ecommerce market has turned into a ground where many exciting games are being played for almost a decade. Venture Capitalists or VCs tested waters with India’s e-Commerce growth and have been pouring in billions of dollars ever since. No other business presents such a wonderful marriage of two generations – the age old retail trade coupled powered by new technology.

Few of the local players have already made the market an exciting place to be. Bigbasket.com, and localbanya.com are two prominent names that have carved a niche for themselves in the market. But then, they have also thrown open the gaping opportunity that’s waiting to be seized. How about some new and fresh players to make the market more feasible for the consumer?

Reliance heard you right now! The company, which has been into unconventional mega scale businesses all over India at mid level, and even into shale gas extraction in foreign countries at very ‘high’ level, has now entered the much untapped online grocery sector to hot up the competition in new India.

When one considers the profit margins, online grocery is not a huge market. In conventional sense, the local traders who run a set up, as humble as it can be, get only up to 10-20% profit on their investment. The funds are usually rotational with slice of revenue fluctuating owing to factors such as inflation, perishable quality of goods and diverse consumer behavior etc.

But there is a huge potential to this section of e-Commerce, and the credit of this has to go to growing cities that have less and less space to allow consumers to shop in peace. This could be a sole driving factor for many consumers to opt for online grocery shopping over conventional mode.

The market has just matured to imbibe this new concept, and also the fact that e-Commerce has become a dominant part of people’s lives by now. Though there is a difference between selling books or electronic gadgets online, as against selling tomatoes or eggs online; the consumers are willing to give a pretty long rope to this sector to grow–much for their convenience.

Among other common reasons for the growth of this sector would be high disposable income level, vibrant economy, government policies that would certainly give a positive push to this new concept and increased efficiency in supply chains.

Reliance has made a quiet entry into this market that stands integrated with e-Commerce, which stands at $100 billion in the next half a decade or so. Right now, ecommerce stands at $15 billion with a huge growth potential that is expected to surge every month.

Reliance’s retail subsidiary Reliance Retail launched in 2006 with its first Reliance Fresh store. Today the chain has 700 stores in over 63 cities in the country. The fate of these stores hangs in balance while Reliance brings about this change in business plan, which could also be applauded for being ‘forward looking’.

Several online retailers are planning to take a jump too including Kishore Biyani’s Future Retail and Kumar Mangalam Birla’s Aditya Birla Retail.

Customer behaviour in big cities is quite typical considering the cost of buying grocery in person. Given the fact that traffic congestion is high in big cities, which also have high income group living in posh localities, e-Commerce can harness the power of ever expanding middle class in the country.

Having sensed the potential, Bigbasket.com has already been funded by up to $32.6 million dollars with the help of Helion Ventures and Zodius Capital. LocalBanya is also looking at raising some handsome amount to carve a niche for itself in the e-Commerce sector.

E-grocers will have it pretty easy owing to the fact that their overheads are probably lesser than running a complete set up. Economical options like having a warehouse with lesser rent and better facilities outside the town, with good supply network would do a world of good to this sector.

The e-Commerce market in grocery sale will probably bring India some of the biggest lessons in the segment, with some valuable management know-hows because soon, small and big business houses will transition into online sales leaving aside their brick-and-mortar models. Challenges will be new and logistics will have to be realigned to meet the supply chain demands.

Image: indiatimes