The deal with Facebook will help Ambani set up a digital platform to take on Amazon and Walmart’s Flipkart
New Delhi: Billionaire Mukesh Ambani’s Reliance Industries has started limited test use of WhatsApp to connect customers to grocery stores, days after Facebook decided to invest USD 5.7 billion in digital assets controlled by the company.
JioMart, an e-commerce venture of Reliance Retail, “has already started interacting with customers on WhatsApp for grocery orders” in Navi Mumbai, Thane and Kalyan, Credit Suisse said in a report.
“The customer initiates the interaction on WhatsApp, checks out the grocery order on JioMart webpage, gets connected with a retail store on WhatsApp and then customer picks up the order from Kirana and pays in cash,” it said, adding the model is likely on delivery and completion of the transaction on one app.
The Facebook deal will help Ambani set up a digital platform to take on Amazon and Walmart’s Flipkart in an e-commerce market that KPMG says is likely to grow to USD 200 billion by 2027.
The deal benefits Facebook via “partnership with the largest retail player in India, where partnership starts with grocery, and later could be extended to medicine distribution, fashion and lifestyle stores, food delivery, etc,” Credit Suisse said in a report.
Also, Reliance Jio, with its 388 million telecom users, could provide telecom infrastructure for various Facebook’s solutions, it said.
For RIL, the large user base of WhatsApp (400 million) could significantly accelerate the adoption of the JioMart app besides it would leverage Facebook’s experience to monetise data through advertising.
“The key advantage is not only the large base of WhatsApp users in India but the amount of time spent on the app per day by an average user.
“This would catapult Jio into the attention of the large user base, thereby addressing the first key barrier of awareness post-launch of its New Commerce offering,” Credit Suisse said adding this was based on assumption that at some stage, JioMart could be a mini-app within WhatsApp (a concept similar to WeChat mini-programmes) which would avoid new 400 million downloads of JioMart and give JioMart immediate access to 400 million users of WhatsApp for grocery.
It is likely that the partnership could be extended beyond grocery to other retail products too.
“Deal cash flow would help RIL bring down overall net debt and help to move towards its target of achieving zero net debt by March 2021,” it added.
J P Morgan in a separate report said it believes that initially WhatsApp would be integrating a ‘Jio Shopping bot’ on the API, and allow users to add the bot to their contacts.
Once added, users can search for a local business, see available products in a catalogue, and purchase the product in the thread or in the shop.
The Facebook deal should help accelerate Jio’s ability to further evolve into a full-stack player across India’s e-commerce ecosystem, it said.
The acquisition of a 9.99 per cent stake in Jio Platforms Ltd for USD 5.7 billion represents the second-largest investment of Facebook to date (the largest was USD 19 billion WhatsApp acquisition in February 2014).
This corresponds to a quarter’s worth of free cash flows for the firm. “Nevertheless, it still represents a significant step for Facebook as this may strengthen its evolving business model in commerce,” Credit Suisse said.