Reliance Retail challenges Amazon, Flipkart; starts online sales of smartphones, electronic goods
Reliance Retail, India’s largest brick-and-mortar retail chain is now vying for a slice of the country’s red-hot online retail market, where sales are expected to touch $32.70 billion this year.
According to The Economic Times, Reliance Retail has launched an online shop front for its smartphones and consumer electronics format Reliance Digital, which is the country’s largest electronics retailer, boasting sales of over Rs 15,100 crore in the last fiscal. “The commercial operation has just been launched across India,” a source told the daily.
Billionaire Mukesh Ambani, the chairman of the company’s parent Reliance Industries Limited had voiced this ambition earlier this month. “As Reliance transitions to become a technology platform company, we see our biggest growth opportunity in creating a hybrid, online-to-offline new commerce platform,” he had said at the company’s annual shareholders’ meeting. And the company has reportedly set the ball rolling after piloting online sales of mobile phones and consumer electronics for employees for over a year.
The reason Reliance Retail has zeroed in on these two product categories is obvious – they are the largest selling categories online. Online accounts for around 38 per cent of India’s smartphone sales, while for televisions it is reportedly around 12 per cent and 6-7 per cent for appliances.
Significantly, smartphones and consumer electronics account for almost 55-60 per cent of the business for Amazon and Flipkart, so the market leaders could be looking at stiff competition from Reliance Retail in the near future.
Citing an industry executive, the report added that Reliance will run heavy discounting from time to time on some products, say, exclusive models or old models – like other online marketplaces – while other products will be priced at par with the Reliance Digital offline stores. “Nevertheless, Reliance Digital already has an aggressive pricing for its offline stores which are, at times, even the lowest in the market and top brands like LG, Samsung, Sony, Xiaomi and Panasonic now control most of the online discounts so pricing will be quite competitive with Amazon and Flipkart,” the source told the daily.
With this latest development Reliance is clearly eyeing a sizeable share of online sales of smartphones, televisions and other consumer electronics during the upcoming festive season. The company’s e-tail experiments thus far were limited to the fashion formats, Ajio.com and Reliance Trends, and Reliance Smart, which focussed on online grocery, FMCG, fruits and vegetables in Mumbai, Pune and Bengaluru.
Reliance Retails’s timing is perfect in another crucial way: The company is currently buoyed by strong Q1 numbers. Just two days ago the company reported an over three-fold jump in its pre-tax profit at Rs 1,069 crore for the first quarter ended June 30. Moreover, its revenue from RIL’s organised retail segment grew over two-fold to Rs 25,890 crore as against Rs 11,571 crore in the corresponding quarter of the last fiscal.
According to the daily, the company intends to differentiate itself with its in-house service wing, ResQ, which takes care of installation, demo and after-sales service. “While this is an omni-channel expansion of Reliance Digital, there will be dedicated focus on making the online operation successful,” a source added.
Reliance Digital – with 305 stores as of June – and 4,530 smaller Jio stores will act as fulfilment centres for the online orders. In any case, the Jio Points already sell smartphones and do catalogue selling of appliances and televisions. The latter reportedly drove around 10 per cent of Reliance Digital’s sales last quarter.
Of course, Reliance Retail won’t find it easy to find a toehold in an already-crowded market. Flipkart, Amazon, Paytm Mall, and Xiaomi’s Mi online store are the largest players in online sales of smartphones and electronics in India. But as India’s largest, fastest-growing and most profitable retail company, it certainly has a lot going for it.