Written by: Kriti Anand
Reliance Retail is making an entry into the online retail sector, and is expected to pose a threat for the mega players in the game. A report has stated that the Mukesh Ambani-led conglomerate Reliance Industries Ltd. is set to create a massive disruption in the market.The online retailers like Amazon and Walmart-owned Flipkart will face some solid competition from Reliance.
According to a market research report, the online retail sales in India with grow by 25.8% to reach $85 billion by 2023. This makes it a perfect time for Reliance to enter this market. Reliance already operates 10,415 stores in more than 6,600 cities, with 500 million annual footfalls. It will need no additional marketing to advertise its expansion.
“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. “This kind of discounting can disrupt any market, and we expect something similar to happen in the grocery space during Reliance’s launch,” he added.
Reliance is known to disrupt markets by launching operations via massive discounts to its customers. In 2003, the company entered the telecom sector 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 per minute. That was followed by the launch of Jio 4G plan in 2016, that dropped data rates from Rs 250 per GB to Rs 50 per GB.
With $18.7 billion in revenue and $9.4 billion in profit during financial year 2019, Reliance Retail is the largest retailer in India, and it grew at a Compound Annual Growth Rate (CAGR) of 55 percent in the last five years.
“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 the report by Forrester, a global market research firm.