Jio Platforms and Facebook have identified four areas of collaboration which, apart from e-commerce, will include smart videoconferencing solutions, mixed reality (an advanced form of augmented reality), and the media, say sources close to the discussions.
On Wednesday, Facebook announced a deal in which it took 9.9 percent stake in Jio Platforms, a fully-owned subsidiary of Reliance Industries, for Rs 43,574 crore.
The Mukesh Ambani group has also taken a decision to go for an IPO in Jio Platforms, instead of Reliance Jio, as was planned earlier, which would offer an exit route to Facebook if they so require.
Sources close to the group point out WhatsApp is creating a chat interface with the service for JioMart, the e-commerce platform of Reliance Retail.
Through this, consumers can order products and kirana (small retail) shops can fulfil them without either of them having to download a separate JioMart app. In one go, it will connect JioMart to over 400 million WhatsApp customers in the country, helping JioMart to catch up with rivals Amazon and Flipkart.
The blueprint, which has been discussed with Facebook, entails connecting to 20 million small retailers and restaurants (of 30 million). These will include eight million food and grocery stores, one million pharma shops, fashion and lifestyle stores, service providers, digital stores, and restaurants.
With grocery one of the mainstays, the plan is to push small stores which have an average of 300-400 Stock Keeping Units (SKUs) on offer to 1,500-2,000 SKUs. “They don’t have to increase their inventory, but they can order the additional SKUs from our warehouses through WhatsApp and they will be delivered in 24 hours. The ease of usage will make it easier for both sides” said a source privy to the plan.
The JioMart platform is currently being tested in Navi Mumbai with 1,000 stores. The plan is to launch it in the country in 24 months with the WhatsApp tie-up. The model is disruptive as it is different from Amazon and Flipkart who have created and developed their own last mile delivery infrastructure.
Sources say Reliance estimates that last mile delivery would cost them 2-3 percent of its operating costs compared to 15-16 percent of Amazon and Flipkart.
The second area of collaboration is in videoconferencing. Facebook offers Portal, a videoconferencing device which is available in India and comes with an AI-powered smart camera which pans and zooms and stays with you even while you move around.
The technology can be incorporated in TVs and possibly on mobile phones, an area which the two will be discussing. Third, in the mixed reality space, Facebook recently bought Oculus, which makes Virtual Reality headsets, for $2 billion.
“Reliance has also developed mixed reality products which are lighter and it is an area where we are looking to collaborate,” said the source.
The fourth area of collaboration which is being considered is in the media space though the details are still being worked out. Both Facebook and Reliance had made an abortive attempt to buy the digital rights of the Indian Premier League. Experts say that while this failed, there are many other areas of content and technology where they can collaborate.
There are concerns in some quarters that the huge deal will face regulatory hurdles due to control over data that the two will get. Sources say its commercial agreement with WhatsApp has incorporated a clause under which there is no obligation by either of the two to share their data.
“The group has signed two separate agreements. One is on the investment which is of a minority stake. The second is a commercial agreement with WhatsApp. Reliance could have signed this agreement even if there was no investment from Facebook,” said the source.
He also pointed out that the Reliance group is openly supportive of net neutrality and that nothing in the deal violates this principle.