Reliance Industries Ltd (RIL) aims to revolutionize India’s retail industry by connecting as many as 30 million kirana or neighbourhood stores, through its offline-to-online initiative.
Unveiling what he termed as a $700 billion opportunity, RIL chairman and managing director Mukesh Ambani said on Monday that the so-called ‘new commerce’ platform would connect consumers, merchants and producers across the country.
“The main purpose of new commerce is to completely transform the unorganized retail market, which accounts for 90% of India’s retail industry. The three crore merchants and kirana shop owners, who generate direct and indirect livelihoods for over 20 crore people, form the backbone of India’s commerce ecosystem," Ambani told shareholders at the company’s annual general meeting.
He said RIL is working towards enriching and empowering the merchants and kirana shop owners with its end-to-end digital and physical distribution stack. “For this, we are deploying blockchain, internet of things (IoT), artificial intelligence (AI) and other new technologies on a pan-India basis. This tech-enabled partnership will link producers, traders, small merchants, consumer brands and consumers."
Reliance Retail’s new commerce initiative is now in the pilot phase, RIL said in its annual report for 2018-19.
Through the differentiated business model, RIL plans to provide a technology platform for millions of small merchants across India to strengthen and grow their business. “New commerce will transfer significant new value to consumers, producers, and merchants. Our merchant point of sale (PoS) solution—Jio Prime Partner PoS—is integral to our plan to create an ecosystem around small merchants," Ambani said, adding Jio Prime Partner PoS will modernize even the smallest neighbourhood kirana shop to become a future-ready digitized store.
In the past year, RIL made significant progress in developing and testing its merchant technology platforms. It’s beta trials with thousands of merchants across multiple locations established the premise of new commerce with significant increase in sales and improvement in margins for the participating merchants.
Ambani said RIL is now preparing to roll out the platform at a larger scale. The new commerce platform thus represents the digital symbiosis of big and small enterprises. “I believe that the small must not only survive, but also thrive in new India," he added.
Ambani said the retail arm will be one of the key growth engines for RIL.
“Reliance Jio and Reliance Retail will account for 50% of the company’s operating profit soon," he said, adding RIL will induct leading global partners in these businesses over the next few quarters, and move towards listing them in the next five years.
On the business of Reliance Retail, he said the company had crossed ₹1.3 trillion in revenue last year and added that two-third of its stores were in tier-II, III and tier-IV towns.
“It is four times larger than the second-largest retail player and also larger than all the other major retailers put together," Ambani said.