Why Reliance’s Foray into Ecommerce is a Potential Threat to Other Market Players
With its decision to go the whole hog in creating a differentiated e-commerce model for India, Reliance has locked horns with all the major players in India’s ecommerce space. Will this move signal the end of the stranglehold that these ecommerce companies have over the domain? Will it mark the beginning of an era, when a supremely dominant and powerful player takes over the ecommerce space lock, stock and barrel? Given the company’s monolithic presence in all major business sectors, and its recent success with its online grocery initiative, there are reasons to believe that Reliance will straddle India’s ecommerce segment like a colossus. This blog talks about the strategic advantages which Reliance enjoys over other ecommerce players in India.
Reliance’s foray into ecommerce comes at a time when the company is about to launch its telecom services and expand its reach to cover nearly 80 percent of India’s population by the end of this year. The cornerstone of the service includes a capacity to serve 100 million plus wireless broadband and 20 million plus home connections and 4G LTE smartphones at prices below Rs.4, 000. In a market where lack of internet penetration and abysmal internet speed is hampering the growth of ecommerce, the synergy of the telecom and ecommerce venture is likely to provide the company with an unbeatable advantage. Like China, which owes its ecommerce success entirely to its state-owned telecoms’, Reliance’s integrated business strategy, involving telecom and ecommerce will help it implement its strategy far more effectively.
A feature endemic to India’s ecommerce boom is the culture of discounts. While the debate over its regressive nature continues, Reliance is in a better position to outdo its competitors with deep discounts. Its strength lies in its 900-odd physical stores and better sourcing capabilities. Unlike other players, Reliance, will be able to sustain its discounts for a considerably longer period of time, and in the process, win over a sizeable section of its competitors’ market share. The opportunity to integrate an ‘offline-online’ model, can truly redefine customer experience and give it the advantage which others cannot even dream to provide. The brand name, not to mention, is another plus which can give the company the initial fillip it requires.
Reliance’s understanding of category management is another advantage which it can harness to steal a march over its competitors. Having dabbled in retail for quite some time, Reliance knows what it takes to benefit the consumer through improved assortments, reduced out of stocks and lower prices. By transferring this offline experience onto online business it can improve collaboration between suppliers and retailers and improve the efficiency of supply chain management. Not having to work upon this area will provide Reliance a head start in its ecommerce venture.
Last year, Reliance added five new stores every two days – setting a new global benchmark of sorts. The company now looks geared up to set new benchmarks for India’s ecommerce growth.