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A year after its launch,

JioMart’s e-
commerce book is
still in its first chapter
It has been a year since Reliance rolled out
JioMart in 200 cities, but things haven’t gone
according to design. JioMart has stumbled in
its plans to woo kiranas and is still a ways from
becoming a full-fledged e-commerce store,
even as it has made gains as an e-grocer

Seetharaman G, Pranav Balakrishnan,

21 May 2021

Taking on the likes of BigBasket, Grofers, and Amazon,

JioMart has racked up an estimated GMV of $375-395
million in the year ended March 2021

But it has struggled to realise its ambitions of becoming a

key supplier to kiranas, thanks to infrequent engagement
and pushback from distributors

It has also found its point-of-sale devices to be a hard sell,

with kiranas reluctant to share data

The much-touted WhatsApp integration has not come to

pass yet; WhatsApp remains a marginal player, with a
0.02% market share in UPI transactions

Read a 200 word free summary.

SHOW SUMMARY

“Terrible” isn’t a word generally associated with

oil and telecom giant Reliance Industries Ltd
(RIL). And yet, that’s the sentiment its e-
commerce venture JioMart drew recently from a
distributor of fast-moving consumer goods
(FMCG). Turns out, JioMart sales representatives
have been visiting kirana (mom-and-pop) stores
partnered with the company once a month. “It
should be at least once a week,” the distributor,
who has operations in Chennai and Bengaluru,
told The Ken.

The information resulted from a survey of 100

kiranas by the brokerage Kotak Institutional
Securities in Bengaluru in February. The
distributor added that while JioMart onboarded
around 9,500 stores in Chennai, it does active
billing only with a third of those.

That’s a lot of non-action for a segment touted as

the “centre of India’s retail revolution”, especially
one that featured prominently in Reliance’s plans
for JioMart. “In the very near future, JioMart—
Jio’s digital new commerce platform, and
Whatsapp—will empower nearly 3 crore small
Indian Kirana shops to digitally transact with
every customer in their neighbourhood,” was
Mukesh Ambani’s grand statement before
JioMart’s launch in May last year. Ambani is
RIL’s chairman and managing director.

It was a simple proposition. The friendly,

neighbourhood kirana would partner with the e-
commerce firm to deliver groceries that
customers ordered on JioMart, either on the
website or through messaging platform
WhatsApp. In turn, JioMart would become
indispensable to these stores by becoming a key
supplier and providing point-of-sale (PoS)
machines. The PoS devices were to be a two-way
street—the kiranas could order their inventory
from JioMart through them, while JioMart could
gather real-time data on the kinds of products
sold by the stores.

E-commerce giant in the

making

Starting out as an online grocer, JioMart added

fashion, electronics, and jewellery to its catalogue
through the second half of 2020 and early 2021,
though the availability of non-grocery products is
limited.

JioMart rolled out in 200 cities and towns with

the promise of expanding to more. RIL also
raised an eye-popping $27 billion in its digital
services and retail arms last year on the back of
JioMart’s potential.

It was to be a retail empire like no other, and RIL

made multiple moves to push it in that direction.
It was to acquire debt-ridden Future Group’s
businesses for $3.4 billion, but Amazon, which
owns a minor stake in Future’s flagship entity,
has legally challenged the deal; it bought a
majority stake in e-pharmacy
Netmeds for $83 million; it acquired Shri
Kannan Departmental Store, a supermarket
chain in the southern state of Tamil Nadu, for
$20 million. The cocktail of Reliance’s financial
muscle, retail footprint, and execution prowess
was hailed as a magic potion that would make
JioMart invincible.

Reality is just not as kind, however.

As of March 2021, Reliance worked with kiranas

in only 33 cities. Even though JioMart offers
better prices than traditional wholesalers or
distributors, it lacks the engagement it needs to
cement its relationship with the kiranas. Only 14
of the 100 kiranas surveyed by Kotak in
Bengaluru had even used a JioMart PoS device,
and half of them had returned it.

In addition, the much-touted promise of

leveraging the power of the Facebook-owned
messaging app WhatsApp has not come to pass
yet. There have been reports of Reliance
planning to embed JioMart within WhatsApp.
But for now, the way a JioMart customer can use
WhatsApp—primarily to check order status and
register complaints—is no different than a year
ago. Questions sent to Reliance went
unanswered. And WhatsApp did not respond
to The Ken’s specific questions on its integration
with JioMart.

Even as it has stumbled in its plans to woo

kiranas, it has made significant inroads into
online grocery, signalling its rivals that they can’t
take it lightly. JioMart reportedly serviced
500,000 orders on average every day in
December.

JioMart’s gross merchandise value (GMV) in the

year ended March 2021 was a respectable Rs
2,750-2,900 crore ($375-395 million), according
to an estimate by an analyst with a domestic
brokerage, who requested anonymity since they
are not authorised to speak to the media. For
context, BigBasket, India’s largest e-grocer, is
believed to have clocked around $1.15 billion in
GMV in the same period, according to research
firm PGA Labs.

But BigBasket, founded in 2011, has a nine-year

head start on JioMart.

Terms of fulfilment

At the time of JioMart’s launch, Reliance had

around 800 supermarkets in over 180 cities and
towns. “The idea they presented was, wherever
there is Reliance Fresh, they would launch
JioMart,” says an executive with BigBasket.
Reliance Fresh is the neighbourhood
supermarket chain that Reliance Retail began its
retail journey with in 2006.

The FMCG distributor quoted earlier, former

employees from JioMart, executives working for
its competitors, and others The Ken spoke to
requested anonymity as they did not want to be
seen publicly commenting on Reliance.

On paper, it makes perfect sense: why would you

not tap into your retail footprint for your online
grocery business? “But real-time inventory
management is very difficult,” says the BigBasket
executive. As a result, a JioMart customer might
place an order for a product that is not available
at the supermarket from where it is to be
delivered.

And given that Reliance Fresh stores measure

1,500 - 3,000 sq ft in size, overcrowding due to
staff taking out products for online delivery is a
real problem. “The Reliance Fresh format does
not allow you to move about and pick products,”
says the FMCG distributor

Given these problems, Reliance was smart

enough to turn its 40,000 sq ft Reliance Market
cash-and-carry outlets into fulfilment centres
towards the end of 2020. As of March 2020,
there were 52 Reliance Market outlets in 46
cities.

When The Ken placed an order on JioMart in

central Mumbai, it was delivered from what was
earlier a Reliance Market store. In other cities,
where order volumes may not be sizable enough
to warrant warehouses, JioMart is likely relying
on Reliance supermarkets. “From the point of
view of servicing the customer profitably, you
need to have concentration of demand,” says
Devangshu Dutta, chief executive of retail
consultancy Third Eyesight.

That may be difficult to come by. The e-grocery

market has grown steadily in the last couple of
years, exploding in the last year or so due to the
pandemic. Even as JioMart fends off SoftBank-
backed Grofers, Amazon, and Walmart-owned
Flipkart in grocery, its biggest rival will continue
to be BigBasket.

Unlike BigBasket, JioMart doesn’t allow its

customers to choose preferred delivery slots. Its
product range is also limited—JioMart has
10,000-12,000 stock-keeping units (SKUs) in
grocery, according to the domestic brokerage
analyst quoted earlier. This is less than half of
BigBasket’s 25,000+ SKUs.

At Rs 600 ($8), JioMart’s average order value is

also lower than Bigbasket’s Rs 1,400 to Rs 1,500
($19-20), but where it scores is free delivery.
JioMart doesn’t have a minimum order size for
free delivery; BigBasket levies a delivery charge
for orders up to Rs 1,200 ($16).

“The next five years will be about the top line for
JioMart,” says the analyst. It doesn’t have to
worry about its margins yet, unlike the 10-year-
old BigBasket.

The company has surpassed BigBasket’s order

numbers—BigBasket saw roughly 330,000 orders
a day in December, including its subscription
service, BB Daily, according to data from PGA
Labs and the BigBasket executive.

But its lead over BigBasket in monthly app

downloads has fallen drastically from 115% in
December to 12% in April, according to
Apptopia, an analytics firm. And, after trailing
JioMart in daily active users (DAUs) between
August 2020 and February 2021, BigBasket
reclaimed the top spot in March and April.

And if JioMart has parent RIL’s firepower behind

it, BigBasket will also get some equally deep-
pocketed help. Steel-to-software conglomerate
Tata Group is in the process of acquiring a
reported 64% stake in BigBasket for $1.2 billion.

The B2B burden

JioMart has tried to move beyond grocery. Over

the last year, it has expanded its offerings to
include fashion, jewellery, and electronics. But
these aren’t available in all the pincodes where
grocery is sold.

And where they are available, The Ken found

that clicking on the electronics tab on the app
redirected us to the website of Reliance Digital,
the electronics store, and choosing the medicines
category took us to Netmeds.

JioMart’s quest to become a full-fledged e-

commerce store is just one-half of its ambitions,
however. The other, equally important, half is
making itself indispensable to kiranas.

What particularly stood out about JioMart at the

time of its launch was its desire to rope in
kiranas as delivery partners, giving the venture
the kind of reach it would take years to build
otherwise.

But two months after it launched its pilot in

Mumbai, JioMart had to halt it owing to a
shortage of delivery personnel at kiranas during
the lockdown. As restrictions eased, Reliance
took it to other cities. In the three months ended
March 2021, JioMart added 10 cities to the 23
where it had been working with kiranas. That’s
just a sixth of the 200 cities JioMart operates in.

“The idea is to have a kirana in a 5km radius and

get whatever you are looking for delivered by the
kirana guy himself and give him a cut,” says a
former employee of JioMart. “The game is to
push as many orders as possible to kiranas so
that they become natural delivery partners.”

But JioMart accounted for just 12% of the total

orders received by the kiranas surveyed by Kotak
in Bengaluru. So the question is, how much will
kiranas actually gain from JioMart?

There’s also a bigger worry for kiranas. If they

want to fulfil JioMart orders, they also have to
necessarily source goods from JioMart.

And this is where JioMart has to take on not just

FMCG distributors but also the likes of B2B e-
commerce company Udaan and Amazon. “It’s
difficult to break (kiranas’) distributor
relationship,” says an executive with a rival cash-
and-carry chain. This bond is built by feet on the
ground and frequent visits to the store.

According to the FMCG distributor quoted

earlier, a sales representative needs to visit 35
stores a day, six days a week—that’s 210 outlets.
Then rinse and repeat every week. But JioMart,
according to the distributor, has a staff of 200 in
the city, with each covering just 40-50 stores.
The company’s once-a-month visits just won’t cut
it.

Connecting JioMart’s e-commerce venture and its

partnership with kiranas is its ultimate endgame
— private labels.

As could be expected of any new Reliance

venture, JioMart undercut other suppliers’
pricing. This meant a high approval rating
among the kiranas Kotak surveyed. But JioMart’s
strategy also forced distributors to take it up with
FMCG companies, says the distributor.
Eventually, Reliance wants to convince kiranas
to stock its high-margin private labels in various
categories, including cereals, detergents, and
floor cleaners.

In a Reliance supermarket, the company can

place its private labels next to well-known rivals
and display prices prominently to elicit buyers’
interest. But a customer walking into a kirana
store is not browsing as much as reading off a
list she already has. So for her to ask for a
Reliance brand, she first needs to be familiar
with it, which means Reliance has to spend
heavily on promotions. Great brands, after all,
don’t build themselves.

Before JioMart can dream of its private labels

flying off kirana shelves, though, it needs to fix
how it supplies to the stores.

Points of friction

Two years ago, according to the first former

JioMart executive quoted above, Reliance
wanted to change the country’s retail landscape
by solving three pain points for kiranas:

1. Detailed invoicing that became necessary

with the implementation of the goods and
services tax (GST)
2. Getting a computer and a printer to carry
out such detailed billing
3. And the threat of online players such as
BigBasket, Grofers, and Amazon

JioMart’s three-in-one solution was its smart PoS

machines that would track real-time inventory,
help the kirana owner place orders for goods
from JioMart, and also receive grocery orders
from neighbourhood customers through
JioMart.

But as we wrote in December last year, Jio’s PoS

machines—which are given for a refundable
deposit of Rs 3,000 ($41)—ran into multiple
problems. Not only was the machine buggy, but
the use of these devices also necessitated a
significant behavioural shift for the merchant—a
big ask. Many returned the machines. Only seven
of the 100 kiranas in the Kotak survey used the
PoS device.

“There is a trust deficit when a company that is

competing with you is trying to not just supply
goods to you but also learn about the market by
tracking inventory,” says an executive with
Jumbotail, a B2B player that competes with
JioMart and Udaan. “It looks like Jio is trying to
build trust by first supplying to shops and
building a relationship before getting into the
shop and asking them to deliver goods for
them.”

As its PoS plan began running into trouble,

JioMart launched an Android app called JioMart
Partner for merchants in November. According to
Apptopia, the app has been downloaded close to
900,000 times since November, but month on
month, downloads dipped in March and April.
And its DAUs in April—176,400—were nearly
the same as in March.

“I have been getting messages from Jio asking

me to download the app,” says Jijeesh V, owner
of J24 Brothers Store, a grocery store at
Indiranagar in Bengaluru. Jijeesh was among the
early users of Jio’s PoS machine, but he returned
it last year. He currently runs the store in
partnership with Jumbotail. The Jumbotail
executive quoted above says the new app could
be a sign of JioMart going back to the drawing
board after failing to lure kiranas in its first
attempt.

JioMart’s integration with Facebook-owned

WhatsApp also remains a work in progress.
WhatsApp can be used by a customer to check
the status of her order or to enquire about
missing items. The use case is still stuck at the
basic step.

There have been reports that Reliance and

Facebook—which invested $5.7 billion for a
9.99% in Reliance’s digital services arm—are
planning to embed JioMart within the chat app.
But a key assumption on which the JioMart-
WhatsApp integration was predicated has not
played out.

Despite much hype about its potential to disrupt

the payments market, WhatsApp Pay’s share of
UPI transactions in April was a mere 0.02% by
volume and 0.01% by value. And making matters
worse is the flak Facebook is facing over
WhatsApp’s privacy policy.

It’s a given that Reliance’s financial might has

been integral to JioMart making a serious dent in
e-grocery within a year of operations. But that
may not suffice in taming the complexities of
India’s retail landscape.

Lead image credit: Rooted Studio/Unsplash

Amazon India bigbasket Dukaantech Facebook

FMCG JioMart Kirana stores Reliance Retail

WhatsApp

AUTHOR

SEETHARAMAN G
Starting out as a business journalist in 2008,
Seetharaman has written about energy, climate
change, retail, banking, and technology. He has
worked with Business Today, a fortnightly, and the
Sunday edition of The Economic Times.

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AUTHOR

PRANAV BALAKRISHNAN
Pranav is one among the graduates who joined from
ACJ's Bloomberg programme. Pranav writes about
mobility and electric vehicles. He also has a keen
interest in e-commerce.

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Reliance Jio
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21 MAY, 21 04 MAY, 21

A year after its Reliance Jio’s K-

launch, JioMart’s e- shaped conundrum
commerce book is still
in its first chapter
SEETHARAMAN G, PRANAV
BALAKRISHNAN ROHIN DHARMAKUMAR

28 Comments

What did you think?

POST RESPONSE

LATEST FIRST

Debdip Ghosh
D Brilliant well researched article with data
points. I guess it will be too early to write-
off or think gross negative about Jio mart
Vs the established players as jio mart will
fine tune it’s business with learning from
the beta phase and improve it’s offering
for both consumers and business
partners. Behaviour change will always
take time specially for Kirana owners but
question is does RIL have the patience to
watchout the entire journey and correct it
course of action from these initial
learnings
MAY 24, 2021 AT 10:00 PM REPLY

Pranav Khaneja
P I think this story completely misses the
mark in comparing Jiomart to the existing
online players. RILs strength lies not in
competing with these niche players, but
creating entirely new markets where it is
the dominant player (the scorched earth
policy) (JIO telecom) . It’s competition lies
28
in getting my mom to switch over to
: