Blog

RIL’s consumer facing businesses across telecom and retail now comprise 50% of the company’s EBITDA

Over the past year, over 3 Lakh merchant or shop keeper partners across 150 cities have come on board the JioMart Platform

The company has witnessed 3x growth in kirana orders and 2x growth in order frequency during the last year

Reliance’s online grocery delivery service JioMart recorded a high of 6.5 Lakh orders in a day in the first year of its launch, Reliance Industries chairman Mukesh Ambani said at the company’s annual general meeting in Jamnagar on Thursday (June 24).

“JioMart’s growth is a testament to its already loyal customer base, 80% of whom are repeat shoppers. JioMart new commerce’s aim is to transform and grow the small merchant ecosystem, so our merchant partners prosper,” Ambani told RIL’s shareholders.

RIL’s consumer facing businesses across telecom and retail now comprise 50% of the company’s earnings before depreciation, interest, taxes and amortisation, he noted. The retail busienss has done well overall, despite the challenges thrown by the pandemic, the RIL chairman noted.

He added that over the past year, over 3 Lakh merchant or shop keeper partners across 150 cities have come on board the JioMart Platform. The grocery delivery platform has seen a 3x growth in kirana orders and 2x growth in order frequency. Ambani said that expansion across cities is underway and one crore merchant partners will be onboared to the platform over the next three years. 

Reliance, which had launched India’s largest hyperlocal platform JioMart last year, has acquired online pharmacy Netmeds, online furniture retailer Urban Ladder and online lingerie retailer Zivame, stepping up its play into the fast-growing e-commerce segment.

Reliance’s Consumer Businesses On Hypergrowth Trajectory

The apparel business sold nearly five lakh units per day and over 18 crore units during the year. RIL’s fashion ecommerce platfomr Ajio has a portfolio of over 2,000 labels and brands and listing of over 5 lakh options. Driven by innovation, Ajio now contributes to over 25% of Reliance Retail’s apparel business.

RIL will further invest in research, design and product development capabilities for the retail business. In the next year RIL will set up design, research, technology and innovation centres in key areas globally and nationally to develop differentiated offerings for diverse customer groups. said Ambani.

It will also strengthen its sourcing ecosystem working closely with producers, MSMEs, service providers, local and international brand companies. RIL is investing in building state-of-the-art supply chain infrastructure across India by linking all major sourcing and consumption locations. This will maximise efficiencies and minimise losses in the supply chain, so that we can share the gains with both consumers and producers, he added.

“An automated, modular, reliable and scalable warehousing and logistics ecosystem will enable us to deliver products anywhere across the country in the shortest possible time.”

Reliance Retail will also focus on expanding its store footprint multi-fold this year with co-located delivery hubs over the next few years. Finally he stated that the focus on acquiring businesses will continue. “We will continue acquiring businesses to heighten our offering and experience to customers, sharpen our omni-channel capabilities, drive operating efficiencies and strengthen our talent pool. Recent acquisitions include leading physical/digital commerce platforms like Netmeds, Urban Ladder and Zivame,” said Ambani.

Reliance Retail is increasingly competing with both the likes of ecommerce giants Flipkart and Amazon on one end as well as the Tata Group which has set its sights on an omnichannel growth trajectory. The digital commerce and merchant partnerships business has gained significant traction in the wake of Covid-induced disruptions and accounted for about 10 % of Reliance Retail’s FY21 revenue of INR 1,53,818 Cr.

According to the latest annual report of Reliance Industries, the digital commerce and merchant partnerships business contributed nearly 10 % of revenues, “significantly stepped up from near zero in the preceding year”.

Describing the growth of the online channel, the company said: “Digital commerce gained significant traction in the wake of lockdown/restrictions” and is “likely to remain buoyant.”

In FY21, Reliance Retail strengthened its digital commerce and omni-channel capabilities across all businesses and adopted latest technologies such as Artificial Intelligence (AI) and Machine Learning (ML) to cater to the changing consumer behaviour and patterns.

“Reliance Retail is looking at deploying AI and Machine Learning (ML) to identify patterns and garner predictive insights into customer behaviour,” as per the annual report.

This will help the company deliver products tailored to changing customer needs faster, build real-time value and enhance the overall customer experience. “It is transforming its end-to-end procurement processes, making it simpler, more efficient and digitised,” it added.

“The thrust on expansion and transformation continued particularly on strengthening omnichannel and digital platform capabilities and scaling up New Commerce,” it said.

Reliance also added that physical stores still remain a growth opportunity for the company, particularly for expansion in smaller towns.

As of March 31, 2021, Reliance Retail was operating 12,711 stores, covering 33.8 Mn sq ft. It operates nearly two-third of that in smaller towns and over half of 1,456 new stores opened in FY21 were in those markets. Moreover, “over half the orders on digital platforms are from Tier II and smaller tier towns,” it said.

In FY 21, Reliance Retail also agreed to acquire the retail and wholesale business and the logistics and warehousing business of the Future Group for a consideration of INR 24,713 Cr. “This acquisition is awaiting requisite approvals,” it added.

The deal is contested by Amazon and final order from the Supreme Court is awaited in this. Reliance Retail also executed India’s largest fundraising of INR 47,265 Cr in FY21 from global investors.