Why RIL loves brand Jio
2 min read 22 Feb 2020, 10:48 AM ISTJio has helped improve RIL’s perception of consumer servicesRIL’s grocery business has already topped $4 billion in sales
PremiumMUMBAI : If you too wonder what's in a name? A look at billionaire Mukesh Ambani's Reliance Industries' (RIL) new ventures may have an answer.
The oil-to-telecom conglomerate, which in 2016 introduced its telecom brand to the world under the name Jio, has taken such a liking to the name that it has been extending it to almost every segment the company is expanding into.
Sample this: RIL's new commerce initiative is called JioMart. Its fuel retail outlets will now be called Jio-BP (erstwhile Reliance). Its education venture is called Jio University. Its fashion portal is christened Ajio and payments bank is named Jio Payments bank. RIL's entertainment ventures are called JioSaavn, JioTV/Cinema and so on.
According to a study by Bank of America Securities, Jio has helped improve RIL’s perception of consumer services.
According to the study, "The perception of RIL’s consumer services has improved post-Jio launch with 66% of them considering it as a more consumer-friendly brand and 60% stating that they may try more Reliance consumer products and services in the future."
The Jio name, according to some RIL officials is the mirror image of "OIL", which changed RIL's fortunes.
In fact, Jio's positive perception bodes well for RIL's consumer ambitions of trying to garner 50% of total EBITDA (earnings before interest, taxes, depreciation, and amortization) to come from consumer business in the future.
In the December quarter, RIL’s consumer businesses -- Reliance Jio Infocomm Ltd (Jio) and Reliance Retail -- contributed a combined 37% of Ebitda (earnings before interest, taxes, depreciation and amortization), against 32% in FY19 and 13% in FY18.
Ebitda is a measure of a company’s overall financial performance.
The total segment Ebitda across all RIL’s businesses increased to ₹23,500 crore in the October-December period, from ₹22,449 crore in the year-ago period. Ebitda for organised retail rose to ₹2,727 crore from ₹2,322 crore year-on-year, while for digital services it rose to ₹5,833 crore from ₹4,066 crore.
Bank of America Securities' survey also found good traction of RIL’s retail services. "A combined 33% surveyed users prefer buying grocery from RIL – of which 20%/13% shop at Reliance Fresh/Reliance Smart respectively. 24% shop from Big Bazaar. A good trend visible is buying online has picked up for electronics, fashion and also grocery. Interestingly Reliance Digital is preferred after Amazon and before Flipkart in terms of consumer preference amongst surveyed users."
According to Credit Suisse, RIL’s grocery business has already topped $4 billion in sales.
To strengthen its retail offering, the Mukesh Ambani lead company has also launched SMART Point, a smaller avatar of a SMART store with presence in a residential neighbourhood.
The stores are full-fledged grocery outlets and have dedicated delivery points for JioMart app orders. The customers on JioMart app will have the option to choose delivery via a nearby kirana store (same day delivery) or a SMART Point. "These new stores offer a minimum 7% discount on grocery and a minimum 10% off on medicines," said Credit Suisse in a report dated 6 February.
And with more business segments to expand into, for instance, diagnostics and healthcare, among others, RIL may get more room to play with the Jio brand.
