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- Mukesh Ambani faces a big challenge modernizing the country鈥檚 inefficient supply chains to keep buyers loyal
MUMBAI: Backed by multi-billion-dollar investments from global tech giants, India鈥檚 richest man is ready to rumble with Amazon and Walmart for the country鈥檚 huge e-commerce market through his conglomerate Reliance.
But it is far from certain that Mukesh Ambani鈥檚 latest gamble will pay off in a crowded market where many suppliers are not well-versed in digital business.
The mogul has long trumpeted his ambition to revolutionise retail in the country of 1.3 billion by convincing farmers and shopkeepers to sell their goods on his new JioMart platform.
But modernising India鈥檚 creaky, inefficient supply chains will not be easy, even for Reliance, the nation鈥檚 largest retailer by revenue with a portfolio including supermarkets, electronics stores and fast-fashion outlets.
Google on Wednesday became the latest Silicon Valley player to invest in the digital unit of the Indian oil-to-telecoms juggernaut, following in the footsteps of Facebook and Intel.
Despite these votes of confidence, Ambani鈥檚 success will depend on India鈥檚 mom-and-pop stores and their ability to adapt to the demands of an online business, analysts say. Keeping bargain-hungry consumers satisfied in a fiercely contested market may be even harder.
Early signs have not been promising for JioMart since its roll-out in 200 Indian cities in May.
Customers have complained about everything from rotting vegetables to missing deliveries and delayed refunds.
An avid online shopper who buys electronics from Amazon and clothing from Walmart-owned retailer Myntra, Mehul Shah is the kind of customer Ambani and his rivals want to catch.
The 22-year-old placed his first JioMart order soon after the platform鈥檚 hotly-anticipated launch. 鈥淚 wanted to experience what it was like... because there was so much hype around it,鈥� he said.
But fewer than half his items were delivered and mint leaves he ordered arrived rotten.
Shah鈥檚 experience underlines the challenges facing Ambani as he attempts to take on Amazon, BigBasket and Grofers, all of which have established supply and delivery networks in India.
The 63-year-old tycoon may deploy the same strategy he used to make his Jio mobile service a market leader after its 2016 launch.
Jio鈥檚 cut-price discounts put phones in the hands of millions of first-time buyers in India, driving rivals out of the race.
Ambani has raised more than $22 billion in a rights issue and through selling stakes in Reliance to foreign investors. The conglomerate is now net-debt-free and has cash to burn, analysts say.
鈥淛ioMart will use the money by offering deep discounting to get consumers, and is in it for the long haul,鈥� said independent analyst Minakshi Ghosh.
But the firm will also need to pump funds into training local shopkeepers in online trading. Many say their businesses have been badly hit by the rise of supermarkets and e-commerce.
鈥淓ven in my dreams I never imagined running such a modern business... or receiving card payments,鈥� said Kavita Chowdhury, a 30-year-old shopkeeper in Navi Mumbai, a city neighbouring India鈥檚 financial capital.
The partnership with JioMart come at the right time for her, with the pandemic forcing her to close her doors. She can now sell online instead, and business is booming.
A Reliance source said JioMart had received an 鈥渁mazing鈥� response from consumers.
鈥淧eople in small towns are buying Del Monte olives and focaccia bread... They are aware of global trends and want more options,鈥� he said.
But he acknowledged the company faced 鈥渢eething issues鈥� in logistics 鈥� problems which analysts believe could prove its Achilles heel.
鈥淵ou need consistent delivery models and customer satisfaction鈥� to run a successful e-commerce operation, said Forrester Research senior forecast analyst Satish Meena. Reliance will not 鈥渉ave a walkover just because of their financial strength,鈥� he said.
Some customers have already sworn off the platform. Vamshi Krishna, 28, said he would never again buy anything from JioMart after his first order went missing.
鈥淚 decided to give them a second chance... because it is an Ambani company,鈥� he said. 鈥淣ow I seriously doubt whether I will ever get my money back.鈥�