Reliance Retail set to disrupt Amazon, Walmart-Flipkart: Report
Reliance Retail's upcoming entry into the online retail sector is the biggest challenge for Amazon and Walmart-Flipkart as the Mukesh Ambani-led behemoth is well positioned to create massive disruption in the market, a new report has stressed.
 
According to the global market research firm Forrester, the online retail sales in India will grow at a five-year CAGR of 25.8 per cent to reach $85 billion by 2023, despite the hiccups of demonetization in 2016, GST in 2017 and the governmental changes in eCommerce policy announced last December.
 
The time is ripe for Reliance Retail, which operates 10,415 stores in more than 6,600 cities, with 500 million annual footfalls - giving the company the kind of scale required to swiftly launch India-based operations.
 
"One of the things that will trouble Amazon and Flipkart is Reliance's history of launching operations via massive discounts," Satish Meena, senior forecast analyst at Forrester Research, said on Tuesday.
 
Reliance entered the telecom sector in 2003 with the Monsoon Hungama tariff plan, which brought tariffs for voice calls down to just Rs 0.40 a minute from the existing rate of Rs 2 a minute, followed by the launch of Jio 4G plan in 2016 that dropped data rates from Rs 250 per GB to Rs 50 per GB.
 
"This kind of discounting can disrupt any market, and we expect something similar to happen in the grocery space during Reliancea�s launch," Meena added.
 
Reliance is fast working on creating the world's largest online-to-offline New Commerce Platform, according to Mukesh Ambani, Chairman and Managing Director, Reliance Industries.
 
"Due to the recent changes in eCommerce policy and the restrictions on an inventory-led model for marketplaces with FDI, Reliance Retail is finding a favourable policy environment to launch operations where it can use its existing retail infrastructure to deliver goods to customers," the Forrester report noted.
 
Reliance launched the food and grocery app among its employees in April 2019 to prepare for the commercial launch later in the year.
 
Reliance Retail is the largest retailer in India, with $18.7 billion in revenue during financial year 2019, and it grew at a CAGR of 55 per cent in the last five years.
 
Reliance Retail had $81 billion in revenue and $9.4 billion in profit during 2019.
 
"This gives Reliance Retail access to long-term capital from the conglomerate, which has a presence in energy, petrochemicals, telecom, textiles, retail, and natural resources," said Forrester.
 
Reliance Retail also has a portfolio of over 40 brands, from the midmarket to premium segments and including Hamleys (which the company has acquired for Rs 620 crore) and Marks & Spencer.
 
"These can provide a boost to the fashion and lifestyle segment, which will be the largest category by online spending in the coming years," said the report.
 
Reliance launched its mobile business at the end of 2015, and by April 2019, it had over 300 million mobile subscribers a" making it the third-largest player in a short span of time.
 
Jio is building on these mobile subscribers by investing in related services to create an ecosystem that gives customers access to rich content and payments options.
 
This ecosystem will be available for Reliance Retail to build on.
 
To compete with Amazon and Flipkart, Reliance will have to significantly improve the customer experience, both in stores and on its online channel, because discounts and cashbacks will not generate loyalty for online customers a" as we saw in the Paytm Mall case.
 
"Removal of discounts may lead to a significant loss of buyers from the platform. The positioning of the Reliance platform and its fulfilment will play a critical role in the fight against Amazon and Flipkart," emphasised the Forrester report.
 
The eCommerce competition in India remains fierce.
 
Amazon has been the most popular online retailer since it surpassed Flipkart in 2016, although Flipkart is still the single-largest online retailer, with 31.9 per cent market share in 2018 (38.4 per cent if you include Myntra and Jabong), closely followed by Amazon at 31 per cent.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User

    COMMENTS

    AAR

    4 months ago

    None of these online retailers can stand against the price point of ebay.in fulfilled by Chinese suppliers. Its sad ebay.in was forcibly bought by flipkart.

    Flash Electronics files suit against Royal Enfield in US for patent infringement
    Electric auto components maker Flash Electronics India on Monday said it has filed a law suit against Eicher Motors Ltd's Royal Enfield in the US for alleged patent infringement of a component used in two-wheeler vehicles.
     
    According to the suit, Royal Enfield (the two wheeler division of Eicher Motors) has infringed Flash Electronics' patent on "regulator rectifier device and method for regulating an output voltage of the same" issued by the United States Patent & Trademark Office on February 20, 2018.
     
    Flash Electronics said, in a statement on Monday, that it would file similar suits in several European countries as Germany, France, Italy, Britain, the Netherlands, Sweden, Spain, Austria, Switzerland and Turkey had granted patents for the device.
     
    The regulator-rectifier is a vital component that smoothly and efficiently converts the AC (alternating current) voltage produced in motorcycle engines into DC (direct current) voltage to charge the batteries, power the headlights, light up the instrument panel, hence driving the motorcycle's electrical systems.
     
    Sanjeev Vasdev, Managing Director, Flash Electronics India Pvt Ltd, said: "It's unfortunate to have to deal with such an unexpected and unprecedented act on the part of Royal Enfield, one of the most prestigious names in the automotive sector. This incident is highly objectionable and has dented the credibility of the brand, at least with us as a partner."
     
    Vasdev said that the company was approached by three officials of Royal Enfield on October 12, 2018 in New Delhi to settle the issue "amicably" and "not to file any suit on the matter". Royal Enfield did not, however, address the issue.
     
    He added that the component maker will take all necessary action required across the world to ensure that Royal Enfield stops infringing the patent and pays compensation for the violation which would run into millions of dollars.
     
    Meanwhile, Eicher Motors in a statement said: "Even though no official communication has been received, we have learnt of a lawsuit filed in the United States of America by Flash Electronics Pvt Ltd. that alleges that one of the components used in some of our motorcycle models sold in the USA infringe on the plaintiff's registered patent.
     
    "We would like to clarify that the said component is supplied to us by an external proprietary supplier, which independently develops and owns the IP rights in the said component." 
     
    According to Eicher Motors, the supplier denies the plaintiff's claims vehemently and the company is actively evaluating the issue internally and seeking legal advice from its US counsels.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User

    With poll control ending, petrol/diesel prices start their journey northwards
    Just a day after the 2019 Lok Sabha polls came to an end, state-owned oil marketing companies (OMC) on Monday have raised the retail price of petrol and diesel signalling that election induced price moderation for petroleum products has come to an end.
     
    On Monday, petrol prices increased by 9 paisa per litre to Rs 71.12 and diesel by a higher 15 paisa per litre to Rs 66.11 in Delhi, ending 15 day run where the product prices maintained consistent fall. Retail petrol and diesel prices have consistently moved downwards in May even though global oil prices have remained firm.
     
    An executive of state-owned oil marketing termed Monday's increase routine based on trailing 15 day price of petrol and diesel in international markets. But informed sources said that companies were under instruction from the government to keep product prices moderate during the elections.
     
    With polls now drawing to a close, OMCs may now cover up for their previous losses and increase petrol and diesel prices in phases irrespective of market conditions. This would mean that consumers could face the first shock from higher transport fuel prices during the initial leg of the new government at the centre.
     
    With global conditions including tension in the gulf region and squeezing of oil supplies from Iran and Venezuela favouring a further increase in crude prices, there could be no letting from higher transport fuel in India unless government cuts its share of excise duty and induced states to reduce VAT.
     
    IANS wrote on May 7 that oil companies may raise the retail price of the two transport fuels between Rs 3-5 per litre in phases to make up for losses they incurred by keeping the prices at artificially low levels in the run up to the elections
     
    Government sources said that oil companies sold petrol at almost Rs 5 per litre discount and diesel at Rs 3 per litre discount in the months of March and April when average crude oil price of Indian basket hit a high of about $67 a barrel and $71 barrel respectively. The level has also maintained during most days in May so far.
     
    At this level of crude oil prices (of over $70 a barrel), petrol was priced at over Rs 78 a litre and diesel over Rs 70 a litre in August 2018. It was however, priced at around Rs 73 and Rs 67 per litre in months of March and April, respectively, and has fallen further in May. This suggests that OMCs losing heavily on retail sale of the two products.
     
    As per one market assessment, oil companies lose just over Rs 150 crore per day if retail petrol and diesel prices are under-priced by Re 1 per litre on any given day. Going by this yardstick, OMCs May lost several thousand crores in the run up Lok Sabha elections 2019.
     
    The OMCs have been soft on increasing petrol and diesel prices since the beginning of 2019 but it has become more pronounced from March when election dates were announced. Since March, there have been numerous days when both petrol and diesel prices have remained static despite sharp movement in global oil prices.
     
    This is not the first time that government has controlled the price of petrol and diesel. 
     
    During the Karnataka state elections last year, petrol and diesel prices remained unchanged for a 19-day period despite rising global crude oil prices. And soon after polls, there was a non-stop 16-day hike period, resulting in an overall rise of approximately Rs 3.5 in both petrol and diesel rates.
     
    The same trend was observed during the Gujarat elections in 2017 when oil PSUs had stopped revising/increasing fuel prices 14 days prior to polling.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)