India’s largest corporate conglomerate, Reliance Industries Ltd. (RIL), has made a strong entry into the online retailing sector by creating India’s biggest offline to online (O2O) platform. While certain Indian tech start-ups have been trying to digitise India’s largely unorganised kirana stores, the entry of Reliance will revolutionise the sector. According to a report by Merill Lynch released on May 7, 2019 there were only 15,000 digitised kirana stores in the country. With Reliance’s role, this figure will shoot up to five million by 2023.
As per the National Association of Software and Services Companies (NASSCOM)'s ‘Strategic Review 2018’ on the Indian Information Technology and Business Process Management (IT-BPM) sector, the e-commerce market was placed at $33 billion in 2017-18, and reached $ 38.5 billion in the financial year 2018-19, growing at a rate of about 17%.
Sachin Salgaonkar and Sukriti Bansal, research analysts from Bank of America, Merrill Lynch said, “With RIL’s entry, we could see an increase in merchant adoptability, as the price points will likely come down (RIL’s current one-time deposit is only Rs. 3,000) and reach would expand.”
These offline retail stores are inclined towards the inculcation of technology and are looking to compete with the rising number of e-retailers. The new taxation regime in India has played an important role in pushing for digitisation and modernisation. Reliance currently has around 300 million customers using its Jio service along with 10,000 outlets of its retail arm in over 6,500 cities in India.
How will it be done?
Reliance is planning to install its Jio MPoS (Mobile to Point of Sale) device at kirana stores, which will allow the customers to order supplies online as they will be connected to the neighbourhood suppliers through Jio’s high-speed 4G network.
Pradip Sett, Owner, Sett Grocery in northern Kolkata informed BE, “Reliance’s new plan to digitise kirana stores will give us a direct access to a large number of customers and increase our sales. After the introduction of this online platform, many people have stated switching over to it as it not only saves time but has also associated a brand name with it.”
The facility can be availed through a one-time investment of Rs. 3,000. SnapBiz offers the same machine at a one-time cost of Rs. 50,000, while Nukkad Shops’ MPoS ranges from Rs. 30,000 to Rs. 55,000. Jio MPoS demands no merchant discount rate while offering a loyalty programme and monetisation strategies. It is expected that with Reliance’s entry, there could be price drops leading to an increase in merchant adoptability.
How does MPoS leverage businesses?
An MPoS is a wireless device, like a tab or a mobile that can be used for transactions, performing functions of a cash register, inventory management and is equipped with powerful analytics tools and allows businesses to track and maintain the inventory levels of multiple stores in real time. This device can help in leveraging businesses. For example, if the queue for payment is too long, customers get irritated and mayrefrain from completing the purchase. To avoid sales losses and waiting time for customers, retailers can directly go to the customer with the MPoS device for billing the product. Many companies are using MPoS devices at present. SnapBizz alone has over 4,500 MPoS devices installed in over seven cities in India, making up more than 30% of the digitised store base. However, with Reliance’s entry, there will be major changes in the segment.