How Jio is set to leverage FB’s Whatsapp potential

Facebook Inc.’s WhatsApp messaging app will be at the forefront of its partnership with Reliance Industries Ltd’s Jio Platforms, as both parties prepare to jointly tap one of the world’s fastest growing retail and payments markets.

The partnership with Facebook and WhatsApp is expected to help Jio derive more revenue from its suite of offerings and millions of subscribers.

“On the one hand, JioMart could enable inventory and back-end supply chain for small shops, on the other, the WhatsApp platform could enable ordering and payments, providing seamless customer experience,” said a research report by Edelweiss. “We do see formidable execution challenges as well as opportunities.”

Analysts said when popular platforms such as WhatsApp and Jio services team up with the ubiquitous kirana stores, it may be of better use for customers. The nationwide lockdown has exposed the weaknesses of the e-commerce businesses, which have faced crippling execution issues, while neighbourhood kiranas offering customers better service.

“So far, only Amazon had the advantage of a strong online-offline presence. The next few million internet users will be those who graduate from feature phones to smartphones and it’s likely that they will be Jio users with WhatsApp presence. While Amazon has made major investments and inroads into this space through their seller network, this deal will give Facebook a foothold in the market,” said Pareekh Jain, founder and lead analyst, EIIRTrend and Pareekh Consulting.

Jio will also gain from Facebook’s user analytics-powered targeted advertising, one of the key pillars of Facebook’s business model, and something that it had so far not used for WhatsApp.

In response to queries on WhatsApp’s secure encryption, which had led to some friction with the government, a Facebook spokesperson said the arrangement is not focused on data sharing. “However, people should keep in mind that messaging a business, for example, means you are sharing your WhatsApp number with that business.” He said the tie-up with Jio is focused on making it easy for people to interact with a business of their choice and ultimately make it seamless to find or purchase a product right within a chat.

The partnership will help both parties to take on their competitors across e-commerce, payments, enterprise services and other areas where rivals such as Google, Amazon, Flipkart are currently in a strong position. Basically, the big tech companies of the US will be fighting it off with the telco and e-commerce ecosystem, as India sees changing business models post-covid-19 lockdown.

“The clear gap that the likes of Facebook and Google faced with their Marketplace or Neighbourly models was the offline connection and Jio-Reliance Retail presence offers that scale,” said Satish Meena, senior analyst, Forrester Research.