Business magnate Mukesh Ambani seems to be developing a penchant for partnering with startups. Textile-to-telecom giant Reliance Industries has now entered into agreements to acquire two startups, first, last mile logistics delivery service Grab A Grub and second, software services firm C-Square Info Solutions.
Around a week back, it had entered into agreements to acquire three startups – language localization technology platform Reverie Language Technologies, software-as-a-service startup Easygov, software simulation services company SankhyaSutra Labs, according to regulatory filings and media reports.
The acquisitions follow Ambani’s plan to enter around $36 billion India’s e-commerce market dominated by foreign rivals such as Amazon and Walmart. 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.
Reliance had also picked up stake in blockchain startup Vakt Holdings in December 2018. In September last year, it had backed artificial intelligence startup Netradyne and edtech startup Embibe earlier in April.
Building Third Front
Market experts have said that Reliance has the necessary wherewithal to take on Amazon and Walmart but it has to be with cautious optimism.
“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.
Moreover, Ambani doesn’t have to bother about long-term losses. Reliance Industries reported a consolidated net profit of Rs 9,459 crore in the quarter ended June last year.
“Retail sector operates between 3-5% of profit and Reliance has been able to maintain that profit. Nobody would have thought that they would pull off something like Jio,” said Naresh T Raisinghani, CEO and Executive Director at India division of global consulting firm BMGI.
The question still would be 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.
The acquisition of Grab a Grub is likely to help Reliance with those last mile delivery challenges apart from C-Square software solution and Reverie that allows businesses to connect with their customers in local languages.
“The aforesaid investment will further augment the group’s digital commerce initiatives and strengthen its logistics services, catering to both B2B and B2C segments,” PTI quoted Reliance as saying.
Reliance will further invest up to Rs 40 crore in Grab a Grub while its total investment will translate into 83 per cent of equity capital in the startup, Reliance said in the filing.
India’s e-commerce market is expected to grow to $150 billion by 2022, said a report by Nasscom and consulting firm PwC India.―Financial Express