DAIKIN

Reliance Is Betting On Startups To Become New E-comm Juggernaut

Mukesh Ambani’s penchant for technology startups in India seems to be only getting stronger. Textile-to-telecom giant Reliance Industries’ Chairman Mukesh Ambani has been making a beeline for such startups from past few months, which experts believed is to set up the digital infrastructure framework, to become the e-commerce juggernaut. If Mukesh Ambani replicates Reliance Jio’s telecom disruption in around $39 billion Indian e-commerce market then it might put Amazon and Walmart-owned Flipkart’s grand future plans in jeopardy.

Building digital infrastructure

While Reliance has been investing and acquiring, though not very often, startups but since around September 2018, the group had poured capital in three startups and gobbled five startups — all technology businesses. For instance, in logistics, it backed artificial intelligence (AI) startup Netradyne that focuses on the driver and commercial vehicle safety and earlier this month it acquired last mile logistics company Grab A Grub.

Also in March, it acquired C-Square Info Solutions that provides software for managing logistics of distribution and retail operations. Further, since language has become significant in e-commerce play to tap ‘Bharat’ users, Reliance acquisition of languagelocalizationn technology platform Reverie Language Technologies in February hinted towards that. There are other startups in the software-as-a-service, blockchain and other areas that Reliance had bet on. It is now reportedly acquiring AI-backed B2B chatbot maker Haptik that is backed by Times Internet.

“I think it is towards their (planned) e-commerce business. They (Reliance) they are trying to do which nobody in the world has done, that is a telecom player who is also building assets on the user engagement side. For instance, they acquired music streaming app Saavn and then they have JioCinema in content play and now looking into payments space through point of sale (PoS) business to on-board kirana merchants,” Madhukar Sinha, Founding Partner at India Quotient told Financial Express Online.

Haptik, if acquired, will be Reliance’s second deal in the AI space in the past few months even as AI plays a significant part in the operations of logistics and last mile deliveries to optimise time and cost and to get a real-time update on inventory.

“AI or deep tech startups can make a huge difference depending on what they are focusing on in the e-commerce value chain. There are quite a few startups trying to solve the problem on the inventory management or warehousing solution side or even on the customer-end. Reliance tries to be number one in whatever it does. So they are trying to acquire talent and existing solutions for that,” said Vikram Gupta, Founder and Managing Partner, Ivycap Ventures.

Comments from Reliance are awaited for this story and will be updated as and when received.

Getting flexible

The question, however, remains is why does Reliance need to do such acquisitions if its size gives it the wherewithal to build and scale almost everything under the sun? Arguably it doesn’t need help on the strategy side and would do the e-commerce bit in its own way along with “how they want to reach to the consumers, how much money they want to spend, how they will launch etc., which is already thought out by the top leadership,” said Sinha.

However, there are “technology startups with relevant experience in the market, which can help Reliance avoid mistakes if it tries to do this on its own,” added Sinha.

Moreover, sometimes it is also a mindset challenge that large enterprises suffer from — the inability to have the nimbleness and swiftness of a startup where there is flexibility in operations and structure.

“Reliance has a traditional mindset which is very hard to change overnight. There has to be somebody to understand the next wave of technology, e-commerce, and AI-led growth. To build that in-house with such a mindset is not easy. Hence you go out to acquire such companies,” said Gupta.

During an event in Gujarat in January this year, Ambani had announced plans of launching an e-commerce venture that would leverage its near 300 million Jio customers and 10,000 outlets of its retail arm in more than 6,500 cities.

Particularly for its Grab A Grub acquisition, Reliance had said that it “will further augment the group’s digital commerce initiatives and strengthen its logistics services, catering to both B2B and B2C segments,” PTI reported.

Ecosystem on its Side

Indeed Reliance has the groundwork in place with near 300 million customers using its Jio service along with 10,000 outlets of its retail arm in over 6,500 cities in India. In fact, it has an entire ecosystem, much like Amazon.

“Reliance has an ecosystem of entertainment, financial services, payment gateway, etc. Once it has customers hooked on to these services, then it is a question of time before it can start offering merchandise as well,” Arvind Singhal, chairman and managing director at retail consultancy firm Technopak told Financial Express Online earlier.

The question of how does it serve every single customer with timely doorstep delivery, proper returns, refunds, fight fake products etc., to take pole position in the e-commerce market, now seems to be gradually getting answered.―Financial Express

Share this:

Leave a Reply

Stay Updated on TV Veopar Journal.
Receive our Daily Newsletter.