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Here’s what gives JioMart an edge over its competitors, according to Goldman Sachs

Nov 5, 2020, 10:13 IST
Business Insider India
BI India
  • Analysts at Goldman Sachs expect JioMart to garner a 50% market share of India’s online grocery segment by FY25.
  • JioMart’s expansion, even as competitors like Grofers and Swiggy have limited their presence, will give it an added advantage.
  • Barely a year old in the industry, JioMart is riding on Reliance’s power and presence across the country.
Mukesh Ambani’s JioMart has been hailed as the next big thing in online grocery retail. This, even as the sector sees tough competition from the likes of Amazon, Flipkart, Grofers, Swiggy, and BigBasket, with whom the Tata Group is reportedly in talks for a 50% stake.

Analysts at Goldman Sachs expect JioMart to have a 50% market share of India’s online grocery segment by FY25. And here’s why they are bullish about the company’s growth.

JioMart’s foray into areas others have refrained from
Ambani’s e-commerce bet made a soft launch in December 2019 in select areas of Thane, Navi Mumbai, and Kalyan. But as the coronavirus lockdown began and the opportunities in e-grocery became more evident, JioMart was quick to act and expanded to over 200 cities.

And this gives it an edge over others – its presence across India and offline-to-online approach by partnering with kirana stores. India’s kirana retail network of millions of stores remains the primary source of sales for grocery across the country. It has also become the object of fascination for the likes of Amazon, Flipkart. “India has 10 million kirana stores, which account for 90% of grocery retail. JioMart has already launched in more than 200 cities, leveraging Reliance Retail’s store network, with kirana partnerships across 20 cities,” said the Goldman Sachs report.

JioMart’s expansion comes even as its competitors like Grofers and Swiggy have limited their presence. Grofers, which is present in 30 cities, sees most of its revenue come in from the top four or five cities. “Even Swiggy, which operates a food platform across 500 cities, mentioned it will restrict grocery to about 20 cities,” said the report.

Barely a year old in the industry, JioMart is riding on Reliance’s power and presence across the country.

India’s online grocery segment: The players
CompanyLaunch datePresence (no. of cities)
Amazon FreshAugust, 20199
Flipkart SupermartNovember, 20175
Swiggy StoresFebruary, 201930
BigBasketOctober, 201126
GrofersDecember, 201330
JioMartDecember, 2017200+

JioMart’s downloads are surging
JioMart’s availability in cities that the other apps don’t service during the nationwide lockdown also helped add to its popularity. During its first quarter (April-June) earnings report, Reliance had said that JioMart clocked big numbers during the lockdown – over 400,000 orders on a single day. In the second quarter, the company said that JioMart continues to scale-up rapidly with a consistent increase in daily customer orders.

The Goldman Sachs report showed that the new app downloads for JioMart in recent weeks have been double than BigBasket and Grofers put together.

BI India

Even while the analysts at Goldman Sachs noted that downloads don’t necessarily translate to transactions on the app, they said, “it is an indicator of initial customer engagement, which can translate into future market share.”

JioMart + WhatsApp integration boost?

Another advantage lying on JioMart’s side is its possible integration with WhatsApp. During Facebook’s $5.7 billion investment in Reliance in April, it was clear that Reliance Retail would be leveraging WhatsApp’s existing large user base in India to reach out to new customers. In return, WhatsApp Pay’s possible integration with JioMart will give Facebook the much-needed kickoff for its payments feature.

“RIL’s foray into the space leveraging its large offline distribution capabilities, and integration of ability to order groceries through WhatsApp, a platform with >400 mn MAUs in India,” said the report about Reliance’s stronghold in grocery.
Tapping newer avenues

Meanwhile, JioMart is also expanding beyond groceries; it has recently forayed into fashion, consumer electronics. And it's experiments with fashion came right before the festive season – with Diwali around the corner.

According to reports, JioMart is also working on a subscription-based model for dairy delivery – quite similar to MilkBasket and Big Basket offerings. It's also reportedly working on private label offerings – a path that its peers in grocery BigBasket and Grofers have already taken up successfully.

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