India-based Reliance Industries Ltd’s retail arm – Reliance Retail Ltd – has recently started pilot testing its food and grocery app amongst its employees in an attempt to compete with online giants Amazon.com Inc. and Walmart Inc.-owned Flipkart. This strategy has potential to disrupt Indian e-commerce sector, says GlobalData, a leading data and analytics company.
Reliance Retail stands first both in terms of revenue and number of retail stores in India. According to its financial statement, the company generated US$ 19 billion revenue from its 10,400 retail outlets in 2018-19.
The company is integrating its entire infrastructure with its exclusive e-commerce platform. It is even withdrawing its fashion and lifestyle products from its existing e-commerce partners Amazon and Flipkart in an attempt to create its own distribution channel.
Apurv Yadav, Consumer Analyst at GlobalData, says: “This integrated business model would make the supply chain more efficient and would better connect company with its customers. In addition, Reliance Retail has a competitive advantage over current major online companies such as Amazon and Flipkart in terms of regulations.”
The Government of India has recently tightened rules for foreign funded e-commerce marketplaces to protect the interest of domestic brick and mortar retailers. Unlike Amazon and Flipkart, Reliance Retail is an Indian company and it can easily secure funding required during start-up and operation phases from its parent company.
Yadav concludes “The organic growth strategy adopted by the company can be easily relied upon since it has vertical integration in its DNA. The company’s parent company Reliance Industries had successfully integrated its textile and petrochemical business in the past so we can also expect a successful integration of retail and e-commerce business.”