Reliance Retail eyes e-com foray; but why a marketplace?

21 Oct, 2013

VCCircle_RILIndia's largest retail firm Reliance Retail, which is part of Mukesh Ambani-led oil & gas major Reliance Industries, is planning to extend its sales network by adding an e-commerce channel. What's more, it may not be a plain vanilla site replicating its offline stores, but the company may actually go ahead and create a marketplace—i.e. allowing other retailers to sell through its site, according to The Economic Times citing sources.

The report suggests that this initiative is expected to be unveiled in six-eight months.

This is not the first time a large format retail store chain is looking to venture in to the online space. Future Group already has an online channel for its electronics retail chain ezone. In September this year, Future Retail Ltd, which houses a string of retail chain formats, launched Big Bazaar Direct, an e-commerce-enabled direct selling business for its flagship hypermarket Big Bazaar.

Many other retailers also have active online sales formats; these include department chain Shoppers Stop and niche electronics retailers such as Tata's Croma and Vijay Sales.

But the entry of Reliance Retail with a heavy wallet as well as a wide physical retail network can shake up competition in the market. This is not just with respect to the entry of another online retail player but in terms of a possible war for talent in the market.

What could be striking, however, is the firm implementing a marketplace. This will pitch it against big guns in the business, including Amazon and eBay besides Indian e-tailers such as Flipkart and Snapdeal.

Reliance retail's wide physical network is likely to be a big advantage for the firm. The company operates over 1,500 stores, including hypermarkets, electronics stores, apparel outlets and neighbourhood or supermarket shops. This gives it a ready-made backend which can be used for fulfilment either for its own products or for servicing sales for third-party retailers on its proposed site.

Moreover, it may shake up the fee structures charged by other marketplaces squeezing margins for others in the business.

If it goes ahead with a hybrid model like Flipkart, which has integrated a marketplace to its existing site, given its existing store formats, Reliance's store could be taking on virtually all e-com ventures in the country, including grocery e-tailers like BigBasket, ZopNow and Ekstop, something no other e-com venture, including big marketplaces, are doing currently.

We have contacted the company for an official word on the same and will update the story if we hear from the firm.

(Edited by Joby Puthuparampil Johnson)