Market cries foul on e-commerce companies saying that they are killing offline retail shops. But the data shows a different picture.The gap between offline retail sales and online retail sales is widening and still more than 83% of the total retails sales market is controlled by offline stores and most interesting fact is that the growth of online stores are very limited comparing to offline stores, both on volume and spread.
Then who gains really, the brands and geographically limited products and services are scoring. In the initial stages the products of mass demand and discounts were in high demand and created huge volume, but in the last two years the scenario is changed. Now the market datas from different e-commerce giants shows that the brands are replacing non branded products. People searches online stores for more branded products rather than unbranded products, discounts play second fiddle to the purchasing decision.
Another aspects which is evolving is that the market is widening to different emerging markets rather than creating huge volumes in one market. It is clear that e-commerce business model is there to stay and grow as for the last 7 years the growth rate is more than 24% per annum.
Future and emerging markets role
Emerging markets like India, China, Brazil, Russia etc are going to make big growth in e-commerce.As the internet connectivity is increasing to more people across the globe a total of more than 20 percent of the total retails sales is expected to come from these emerging markets. The big contention here is that e-commerce is going to kill the brick and mortar offline retail shops. But when heed to this argument, we also need to note that the market is not stagnant and it growing in volume and spread.
Reliance Retail entry into e-commerce business
India is emerging to be one of the best market for e-commerce business as the internet connectivity is gaining phase with tough competition from internet providers reducing the tariffs and increasing the accessibility.
Reliance Industries, one of the largest corporates across the globe already shown their interest in retail and their increased interest in e-commerce is visible. Reliance Retail, the retail business arm of Reliance Industries Limited has announced an ambitious plan to launch its own e-commerce platform in the second half of 2019. It is going to be the next big from Reliance group after JIO. The impact created by JIO and the way in which it has changed entire telecom market and business dynamics is the clear proof for how Reliance will take on the market.
Worry for established players like Amazon, Flipkart and for others.
Reliance Retail is going to take the market by storm. The way in which Jio made 4G a habit and initiated a price war, is clear indication that Reliance Retail is going to taken on big players with full power. The brand Reliance have a great recall value than any other brands in India and most part of the world. They already have good geographical presence, supply and procurement chains, so market penetration with lightening speed will not be a problem for the company. When we look on to the strength which will work as core reasons for success for Reliance Retail are
- Share holders confidence : Mukesh Ambani lead Reliance always created benchmarks for success in the businesses they enter. Let it be petroleum, telecommunication, retail chains, e-commerce in vegetable etc, they within short span of time created wonders in business.
- Business of the soil : When the government is tightening rules for overseas entities to run e-commerce businesses in India it will be easy for Reliance to roll out and establish its e-commerce business as they are an Indian company.
- Strong business network: This is one area where reliance is going to gain much benefit. Market data shows that as December 31, 2018 Reliance Retail have a network strength of 9900 plus retail stores, 510 plus petroleum outlets and have presence in more than 6400 cities and town in India.
- Presence of both offline and online: The greatest advantage for Reliance Retail is that they have a great offline presence, so a correct mixture of offline and online presence will be a great business booster.
- Wide product range : Reliance have products range spans grocery, vegetables, consumer durables, food, footwear and cellular devices. This will help in adding more brands and increasing volume.
- Jio effect: Even if we consider only the Jio customer base created within 2 years of existence, it itself is more than 300 million and growing. E-commerce industry is also growing day by day and reaching every small towns.
For the established players like Amazon and Flipkart, new restriction imposed and going to be imposed against discriminatory or aggressive pricing and vendor ownerships creating practical business problems. The Reliance Retail entry to the domain will create a customer transition from them to Reliance and will give shockwaves.