Reliance Retail and WhatsApp have entered into a commercial pact to accelerate Reliance Retail’s JioMart platform by connecting nearby ‘kirana’ shops to customers, enabling home delivery over Jio’s mobile interface.
This announcement is concurrent to the investment WhatsApp’s parent company Facebook is making in Jio Platforms — a fully-owned subsidiary of Reliance Industries Ltd (RIL) — by buying a 9.9% stake for $5.7 billion ( ₹43,574 crore). The deal gives the mobile communications, entertainment and e-commerce platform a pre-enterprise value of ₹4.62 trillion, assuming a conversion rate of ₹70.
“WhatsApp already plays an important role in helping people and businesses connect in India. Reliance Retail’s New Commerce platform, JioMart, is being built in partnership with millions of small merchants and kirana shops,” RIL said in a press statement on Tuesday.
“All of us at Reliance are humbled by the opportunity to welcome Facebook as our long-term partner in continuing to grow and transform the digital ecosystem of India for the benefit of all Indians,” Ambani said.
The transaction is subject to regulatory and other customary approvals. Morgan Stanley as financial advisor and AZB & Partners and Davis Polk & Wardwell as counsels advised on the transaction.
WhatsApp has over 400 million users in India, its biggest market. Reliance Jio has over 370 million subscribers.
Reliance Retail, in December 2019 soft launched JioMart, dubbing it as “Desh Ki Nayi Dukaan”. JioMart currently caters to online shoppers in the suburban Mumbai areas of Navi Mumbai, Thane and Kalyan.
JioMart is Reliance Retail’s offline-to-online (O2O) initiative, which would link producers, traders, small merchants, brands with consumers through technology. Users can shop from 50,000-plus grocery products and avail free home delivery, on JioMart.
The O20 business model was pioneered by Chinese e-commerce giant Alibaba Group Holding Ltd. Under the O2O model, a consumer searches for the product or service online but buys it from a physical store.
This allows the company to consolidate merchants, who in turn, will cater to local demand, but also help Reliance Retail save costs and enter areas outside the purview of online retailers.
Reliance Retail aims to connect as many as 30 million neighbourhood stores through JioMart, RIL chairman and managing director Mukesh Ambani said at the company’s annual general meeting on 12 August.
