JioMart Business Model | JioMart Case Study

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JioMart Business Model | JioMart Case Study

Groceries accounted for 70% of the Indian retail market, with neighborhood stores accounting for 90% of that. JioMart, a nationwide online grocery store, was launched by Reliance Industries in over 200 towns across the country. JioMart was expected to make Amazon, Flipkart, and Big Basket a run for their money in the Indian grocery delivery market. Because online grocery orders had increased, reducing store visits, the national roll-out provided consumers with a useful alternative to existing players (BigBasket, Grofers). Neighborhood stores, supermarkets, hypermarkets, wholesale, and online stores were all managed by Reliance Retail.

Reliance already had a strong presence in the consumer electronics, fashion, lifestyle, and grocery segments. In the December quarter of 2019, the retail company generated revenue of Rs 45,000 crore.

JioMart’s approach was to entice middle-class households by unbundling services and changing their buying habits in the process. The goal was to encourage smaller, more frequent purchases while maintaining the product’s value. From a low base, JioMart had seen a 4x increase in online orders.

Reliance Industries’ latest bet to tap into Jio’s digital user base and the company’s current retail network was a digital grocery. Reliance recently raised Rs 43,574 crore from Facebook in exchange for a 9.99 percent equity stake in Jio to help Kirana store owners communicate with customers and vice versa.

Reliance Industries’ retail aspirations were centered on JioMart. However, in order to realize its retail aspirations, Reliance would have to compete with other well-funded companies such as Amazon, Alibaba-backed BigBasket, and Tencent-backed Udaan, all of which had a first-mover advantage.

Given that its success, if it happens, would be contingent on Jio Platforms’ 380 million and increasing subscriber base, there were concerns about how the online retail format would handle privacy and data handling issues. Facebook, which has had its own data privacy fights with regulators around the world, owned a 9.99 percent stake in Jio Platforms, a subsidiary of Reliance Industries. Facebook, which has had its own data privacy fights with regulators around the world, owned a 9.99 percent stake in Jio Platforms, a Reliance Industries subsidiary. The case looked at JioMart’s strengths and weaknesses in the current online grocery store market. It was for the purpose of determining how the JioMart Market ecosystem will function for customers and retailers. It was also to be seen how issues of privacy and data handling would be addressed.

Jio Mart Business Model | Case Study of JioMart

Last December, Reliance Retail Ltd, the retail arm of Reliance Industries Ltd, soft-launched its new business venture, dubbed “JioMart.” The positioning is strategic. Domestic consumption, which currently accounts for 60% of India’s GDP, is expected to expand to a $6 trillion opportunity by 2030, according to a Bain report. E-commerce sales were estimated to be just $2.5 billion in 2019-20, out of a total $550 billion in food and grocery sales in India. The retail arm of Reliance and its telecom arm, Jio, had teamed up to launch JioMart. This was accomplished by providing digital terminals to shopkeepers in the brick and mortar space. The emphasis was on making things possible.

The retail arm of Reliance and its telecom arm, Jio, had teamed up to launch JioMart. This was accomplished by providing digital terminals to shopkeepers in the brick and mortar space. The goal was to make inventory management and stock orders from Reliance’s wholesaler system easier.

 

RIL was providing local traders with an O2O (online-to-offline) marketplace through this. This was based on the successful business model pioneered by Alibaba Group Holding Ltd, a Chinese e-commerce behemoth. An O2O model is an omnichannel approach in which a customer searches for a product or service online but purchases it from a physical location.

JioMart began in early 2019 as a drive to instal point-of-sale (PoS) machines and an order-taking platform for Kirana (corner) stores. This was accomplished by making a deposit of between Rs.3,000 and Rs.3,500. In the JioMart ecosystem, Kiranas had intended to handle orders and payments. When order volumes increased, this would happen. It would be possible as the economy gradually opened up.

JioMart has expanded its product line beyond groceries to include personal care, home care, and baby care. The company had advertised a lucrative sales promotion scheme that included a minimum 5% discount on some goods. Furthermore, JioMart intended to offer customers incentives for making large purchases. The plan was to give the Kirana credit back when their clients made their next large purchase.

While the Jio platform currently offers grocery and other basic products, the entire retail portfolio was expected to be diversified and extended to include fashion, lifestyle, and consumer electronics product lines.

“With Reliance Fresh and Smart, grocery shopping is even easier. No more sweating it out in crowded markets, grocery stores, and supermarkets – now shop from the comfort of your own home, office, or on the go,” according to JioMart’s website’s “about us” page.

JioMart will face off against vertical online marketplaces like Alibaba’s BigBasket and SoftBank’s Grofers, as well as horizontal players like Amazon Pantry, Flipkart Supermart, and others.

After running pilot test marketing in Maharashtra’s Navi Mumbai, Thane, and Kalyan, Mukesh Ambani’s online grocery dream project JioMart has expanded to multiple cities. The number of towns currently served by JioMart has not been confirmed. The pin codes used, however, showed that the service was available in a number of Tier I and II cities, including Chandigarh, Dehradun, Dhanbad, Gwalior, Kota, Ludhiana, and Surat. Customers in Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, and other metros can use the JioMart platform application to place orders.

Facebook, the social media beast, announced a $5.7 billion investment in Jio Platforms Ltd, Reliance Industries Ltd’s strategic business unit. “Our objective is to is to provide new opportunities for all types of businesses, but  Especially for the more than 60 million small businesses that make up the U.S. economy. “Across India,” said the firms in a joint statement.

Jio’s connectivity platform, which had over 388 million users, and Facebook’s 328 million monthly active users (MAU), as well as instant messaging app WhatsApp’s 400 million MAUs, were brought together by the deal. Jio Platforms, which runs JioMart, has received strategic investments worth Rs 78,562 crore in the last month from Facebook, private equity firms Silver Lake, Vista Equity Partners, KKR, and General Atlantic.

With the potential for growth, Facebook recently invested $5.7 billion in Jio Platforms for a 9.99 percent stake. The company predicted that 30 million small Kirana stores will use its digital platform, boosting their profits, creating jobs, and benefiting customers with faster delivery of goods.

These were, nonetheless, optimistic figures that needed to be met. The e-commerce service providers were no match for the neighborhood Kirana stores and Indian retail chains, whether it was due to supply and distribution bottlenecks or a lack of demand.

A number of key steps had to be taken in order for the Ecommerce-Kirana partnership model to succeed in India. Making E-commerce Policies that recognized the importance of including Kirana stores in the e-commerce ecosystem, provided a level playing field between domestic and international e-commerce service providers through transparent legislation, and built the necessary infrastructure for driving the e-commerce-Kirana partnership model were all necessary.

“From a low base, JioMart has seen a fourfold increase in online orders. According to a Bernstein report, JioMart now competes directly with Amazon and Flipkart in e-commerce because of its pan-India presence.

Jio Platforms’ 380 million and growing customer base, on the other hand, will be critical to its future success. There were also concerns about how the online retail format would handle privacy and data handling issues.

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