Nearly eight years have passed since Reliance Industries Limited (RIL) under the stewardship of Mukesh Ambani launched Reliance Retail. In that time, the retail chain has managed to post considerable profit and penetrate into urban as well as rural towns across India. Now, with the e-commerce industry booming and showing no signs of ever slowing down, the RIL-owned retail chain has decided to finally take the plunge into the online marketplace. The Reliance Retail team is working on the model and the company is looking to launch it this year, said sources in the know. While Reliance has e-commerce portals in some of its international fashion brands and a website for its consumer electronics, it is for the first time that the company is exploring e-commerce in value business, digital and fashion, which accounted for nearly 90 per cent of its revenues in FY 2014.
Reliance Retail is the biggest player in the fast-growing Indian retail market with 1,691 stores all over India spread across 11.7 million sq. ft., space in 146 cities. In FY2014, the Ambani owned chain generated revenues of Rupees 14,496 Crores and posted an after-tax profit of Rupees 180 Crore.
The move to an online marketplace alongside its offline retail stores is not at all surprising. The e-commerce industry as a whole is going through a purple patch and Indian online stores such as Flipkart and Snapdeal are generating revenues beyond imagination. Flipkart has hit the $1 billion (Rupees 6,000 crore) mark in gross merchandise value and Snapdeal is looking to achieve the target this year. Moreover, the world’s largest online retailer Amazon has already become the largest in India too, in terms of the number of products on the site.
Poised for an Imminent Launch:
The exigencies of running a business mean that an online presence is a must. As such, RIL’s annual report for FY2014 clearly indicates this. In the report, the company said, “The business is poised to launch multi-channel shopping in the coming year. The potential of e-commerce, combined with the network of physical store locations will offer tremendous choice and convenience at a great value to the consumer.”
Many analysts believe that offline retailers such as Reliance have a huge advantage when entering the online marketplace because they’re already established brands and core customer connect. In spite of this, these analysts believe that going the online route won’t result in a huge boost in Reliance Retail’s revenues and in turn, their profits as e-commerce is still a nascent and developing industry in India. At the same time, RIL wants it to be known that it’s entering the e-commerce industry because it’s the right time to and not for any other reason.