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Indian e-commerce JioMart competes with Amazon, Walmart Inc

Indian e-commerce, JioMart, Reliance Industries, billionaire, Mukesh Ambani, Britain's, Reckitt Benckiser, Colgate-Palmolive, JioMart Partner

Economy

Indian e-commerce JioMart competes with Amazon, Walmart Inc

Indian e-commerce JioMart, which is rolled out by Reliance Industries billionaire Mukesh Ambani has already put giants such as Amazon and Walmart Inc into tough competition and it is anticipated that within the span of 2-3 years, JioMart may ultimately emerge into one of the mightiest retail apps in the region. According to Reuters report JioMart has already become a serious challenge to majority of the so-called sole agents or distributors of local and multinational products, including Britain’s Reckitt Benckiser, Colgate-Palmolive and Unilever. According to the report, JioMart is offering commodities at 15 percent below the price of any of those agents or distributors of local and multinational products. This is the reason, buyers are quickly switching to JioMart thus posing existential challenge to the sole agents, distributors and even retail stores throughout the country. Up and down India in places like small town Vita, the mom-and-pop stores that account for four-fifths of a near- US$900 billion retail market – more than US$700 billion – are increasingly turning to JioMart to stock up on foreign and domestic brands.

Just as Ambani, India’s richest man, has disrupted the country’s telecoms industry, the tycoon is intent on shaking up retail distribution, taking on US e-commerce giants like Amazon and Walmart Inc, expanding fast in India.

India has around 450,000 traditional distributors, who have legions of salespeople to service every corner of the vast nation, including 600,000 villages. They typically earn a margin of 3-5 percent on product prices and mostly take orders physically once a week, making deliveries to retailers within a couple of days.

But Reliance’s model throws a wrench in that supply chain: the mom-and-pop stores, known as ‘kiranas’, can order goods on JioMart Partner with deliveries promised within 24 hours. Reliance also offers training on ordering, credit facilities and free product samples for affiliated kiranas’ customers.

That means hundreds of thousands of salesmen representing consumer giants like Reckitt, Unilever and Colgate-Palmolive, face an existential threat to their business, according to interviews with salespeople, 20 distributors and a trader group with members across India.

Many of the distributors contacted by Reuters said they have slashed their workforce or vehicle fleet, seeing their sales from door-to-door agents drop 20-25 percent in the last year as shopkeepers partner with Reliance.

The scale and speed of the disruption have triggered tensions between traditional distributors and Reliance that have boiled over into physical confrontation in some cases.

In Maharashtra state in the west – home to Vita – and Tamil Nadu in south, traditional salesmen have organized blockades of some JioMart delivery vehicles.

But Reliance remains undeterred in pushing ahead with Ambani’s “new commerce” retail venture, first announced in 2018.

Last year it raised funds from marquee investors including Silver Lake Partners and KKR & Co Inc as it seeks to integrate mom-and-pop stores in what it has touted as a more inclusive approach to digital commerce. That push is widely seen countering the likes of Amazon, which have for years faced – and denied – claims in India of favoring select big sellers at the expense of smaller retailers.

Ambani in 2018 said he eventually wanted to connect 30 million small merchants to the Reliance network. So far, it has 300,000 merchant partners in 150 cities who order consumer goods from Reliance, but the transformation will be magnified many times over if it meets a target of adding 10 million partner stores by 2024.

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