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December 23, 2022
ET Bureau, Dec 23, 2022
Reliance Retail Ventures, a subsidiary of Reliance Industries and the holding company of the group’s retail businesses, signed definitive agreements to acquire German wholesaler Metro AG’s India business – Metro Cash & Carry India-for a total cash consideration of ₹2,850 crore.
As part of the deal, Reliance will get 31 large format stores in 21 cities as well as the realty portfolio that includes six store-occupied properties, 3,500 staff and Metro’s 3 million B2B customers, of which 1 million are frequent buyers. The deal is subject to regulatory and other conditions and is expected to be completed by March 2023, the companies said on Thursday. ET had first reported in its edition dated Oct 15 that Reliance is the frontrunner to acquire Metro’s India business.
Metro AG said in a release that the India business valuation implies a sales multiple of 0.6x based on sales in the year ended September and takes into account lease rental and other related liabilities of e150 million (₹1,320 crore). Metro India generated sales of ₹7,700 crore (926 million euros), its best ever, in the year ended September.
Metro expects a transaction gain of about 150 million euros and an earnings per share (EPS) gain, once the deal closes.
The move will help Reliance consolidate its presence in the B2B trade segment, which it calls new commerce and is among its next big growth drivers, intensifying competition with Udaan, Amazon and Walmart-owned Flipkart. Reliance owns and runs the country’s largest retail business. All Metro India stores will continue to operate under the Metro brand during an agreed transition period.
Reliance Retail Ventures director Isha Ambani said the acquisition of Metro India aligns with its new commerce strategy of building a unique model of shared prosperity through active collaboration with small merchants and enterprises.
“We believe that Metro India’s healthy assets combined with our deep understanding of the Indian merchant and kirana ecosystem will help offer a differentiated value proposition to small businesses in India,” she said.
Metro AG chief executive officer Steffen Greubel said it is selling a growing and profitable wholesale business at the right time. “Indian trade industry is currently experiencing strong consolidation and disproportionate growth in ecommerce, including the B2B segment,” he said. “Due to the market dynamics, a sizable investment would be required to further grow the business. Therefore, now is the right time to use the momentum and open a new chapter for Metro India.”
Metro said it aims for a leading market position in wholesale. Due to increasing market consolidation, accelerated digitalisation and intense competition, Metro India’s operations don’t fit Metro’s core growth strategy, it said. Abneesh Roy, executive director, institutional equities at Nuvama, said the price to sales ratio is 0.37, which seems fair, given the B2B segment is a low-margin business.
Reliance will gain a significant jump in revenue and established locations that it can expand or optimise under its own branding and formats, said Devangshu Dutta, founder of retail consulting firm Third Eyesight. “The additional shelf space will also be very welcome for its own FMCG brands,” he said.
(Published in The Economic Times)
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September 20, 2022
New Delhi: The launch of online shopping experience by WhatsApp, along with Jio platforms, the holding company for the digital services businesses of Reliance Industries (RIL), will help these companies to take on e-commerce behemoths such as Jeff Bezos-controlled Amazon and Walmart-owned Flipkart.
Experts are of the view that the partnership will give JioMart, the e-commerce platform of RIL, around 48.7 crore WhatsApp users in India. At present, the total annualised active e-commerce users in the country are only 20 crore.
Rohan Agarwal, partner at research firm Redseer, told Business Standard: “WhatsApp is the primary messaging app for most Indians and the partnership shows the level of access JioMart would have to reach out to them.”
He went on add that it would help in expanding the reach of the e-commerce to users who might not be accessing online retail platforms.
To recap, speaking at the 45th AGM of RIL on Monday (August 29), Isha Ambani, director, Reliance Retail Ventures Ltd (RRVL), gave a presentation on placing online grocery orders using Meta-owned WhatsApp and making payments.
In a global first, JioMart on WhatsApp will aid users in India, including first-time online shoppers, to have a new shopping experience in ordering a wide range of groceries on WhatsApp. They will be able to shop via JioMart’s entire grocery catalogue by easily selecting their favourite items. Also, they will be able to add these products to the cart and pay without leaving the WhatsApp chat.
Mark Zuckerberg, founder and chief executive officer (CEO), Meta, said the association with JioMart would enable people to buy groceries from JioMart in a single chat.
Agarwal highlighted that most of the online grocery businesses generate from big cities and this alliance will be an opportunity for small cities and towns.
The financial daily quoted Devangshu Dutta, CEO, Third Eyesight, as saying that the partnership will have a big impact on the entire e-commerce industry.
He told the publication: “Reliance is the largest retailer in the country and with deep pockets. It wants to (tap) not just the big cities but small cities and towns as well. Given the fact that WhatApp is something consumers are comfortable with, and grocery is related to high-frequency purchases, they are firing on all cylinders.”
Dutta added that the crucial thing for both companies to be successful is to create a delivery process that is quick and cost-effective.
Source: timesnownews
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April 24, 2022
Written By Devika Singh
The Enforcement Directorate (ED) on April 19 accused Amway India of running a “multi-level marketing (MLM) scam” and attached its assets worth Rs 757.77 crore. This is not the first time that Amway India has been accused of running a ‘pyramid scheme’. Read on to understand how direct selling is different from pyramid schemes and why has the ED attached Amway India’s assets?
The direct selling industry is again under the regulatory scanner in India with the Enforcement Directorate’s (ED) move to attach the assets of the Indian unit of US-based direct selling company, Amway. The ED has accused the company of running a “multi-level marketing (MLM) scam” and attached its assets worth Rs 757.77 crore.
According to an ED statement, the attached property includes Amway India’s land and factory building at Dindigul district in Tamil Nadu, plant and machinery vehicles, bank accounts and fixed deposits.
“Immovable and movable properties worth Rs 411.83 crore and bank balances of Rs 345.94 crore from 36 different accounts belonging to Amway attached,” the ED said. The seizures, the ED said, have been made under the Prevention of Money Laundering Act (PMLA).
This is not the first time that Amway India has been accused of running a ‘pyramid scheme’. The company faced accusations on similar lines in the US in the 1970s and has been under government scrutiny in Karnataka and Kerala in the past. In fact, in 2013, Kerala police arrested then Amway India chief William Scott Pinckney and its directors, accusing them of running a pyramid scheme.
Direct selling has come under scrutiny time and again, as over the years, consumers have been duped by fake sellers hawking defective products and services in the garb of direct selling. To discourage such schemes, the government had proposed a draft policy last year, which aims at regulating the direct selling market segment.
Read on to understand what is direct selling, why the ED attached Amway India’s assets, what is Amway’s stand on the issue, how is direct selling different from pyramid schemes, and what are government regulations around direct selling in India?
What is direct selling?
Direct selling firms deploy agents who buy products from the company and then directly reach out and sell to consumers at their homes or other places instead of through a retail format like a store. The direct selling entity and the agent share the profits made through the sale of products. According to industry estimates, there are about 60 lakh agents in the country, who pursue direct selling as a means of earning additional income.
The direct selling industry, as per estimates, is pegged at Rs 10,000 crore in India, and has been growing at 12-13 percent per annum over the last five years. Experts say multi-vitamins, and home care and personal care products are the top-selling categories through this channel.
Beside Amway, companies such as Avon, Oriflame, Modicare and Tupperware operate in the direct selling segment. Some of these companies have been in India for decades now.
What is pyramid scheme and how is it different from direct selling?
Pyramid schemes are defined as a form of investment in which a paying participant recruits further participants and gets rewarded for it. Over the years, consumers have been duped by fake sellers hawking defective products and services in the garb of direct selling, often bringing the direct selling industry too, under scrutiny.
“Pyramid scheme is a scam to make money for a few people and it is based on selling an empty promise, multiplying it through recruiting people,” said Devangshu Dutta, CEO of retail consultancy Third Eyesight.
However, he added, it has to collapse somewhere because you are selling a product or service that does not exist.
“As opposed to that, in direct selling, the companies are selling products and at the end of it there is a tangible exchange of goods or services. So, even if you have downline distributors, as long as at the end of it the customer is getting something of value, then it’s not really a pyramid scheme,” he added.
Why has ED attached Amway India’s assets?
According to the ED’s press statement, Amway India runs a multi-level-marketing scheme or pyramid scheme, which “induces the common gullible public to join as members of the company and purchase products at exorbitant prices.”
The ED said the prices of most Amway products are “exorbitant as compared to the alternative popular products of reputed manufacturers available in the open market”. The new members, who are asked by the company to join it, are not buying the products to be used by themselves, but to become rich by becoming members as showcased by the upline members, said ED.
“The reality is that the commissions received by the upline members contribute enormously to the hike in prices of the products,” the ED said.
And this, indicated the ED, makes Amway’s operations similar to a pyramid scheme, where new members are recruited by existing members with claims of amassing wealth and becoming rich.
The agency claimed that between FY2003 and FY2022, Amway collected Rs 27,562 crore, of which it paid commissions worth Rs 7,588 crore to affiliate members and distributors in the United States and India.
What is Amway’s stand on the issue?
Amway, however, claims that it does not offer any incentives to new members to join the company and the members are only paid once they make a transaction or sell the product, and hence they are not operating a pyramid scheme.
The company has released a statement saying that the action of the authorities is with regard to the investigation dating back to 2011 and since then Amway has been co-operating with the department and has shared all information as sought from Amway from time to time. Amway said it will continue to cooperate with the government authorities for a fair, legal, and logical conclusion of the outstanding issues.
“As the matter is sub judice, we do not wish to comment further. We request you to exercise caution, considering a misleading impression about our business also affects the livelihood of over 5.5 lakh direct sellers in the country,” it said in a statement to media.
In an conversation last year with Moneycontrol, Amway India CEO Anshu Budhraja had said that Amway India does not charge any registration fee to its agents.
“There are no charges for joining Amway business. Further, to ensure that the customers have a satisfying experience with Amway, our products are backed by a money-back guarantee for 100 percent satisfaction of use,” Budhraja had said.
What are the regulations around direct selling?
The government last year included Direct Selling under the Consumer Protection Act (Direct Selling) Rules, 2021. These new rules prohibit direct selling companies from charging registration fees from their agents, and bars them from charging their agents for the cost of demonstration to prospective buyers.
The rules also forbid direct sellers from engaging in pyramid and money circulation schemes. The rules mandate that the companies operating in the segment would have to appoint a Chief Compliance Officer, a Grievance Redressal Officer, and a Nodal Contact Person. The companies would also need to be registered with the Department for Promotion of Industry and Internal Trade and must have an office in India.
They would also be mandated to maintain a website with all relevant information.
“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices, branches and direct sellers through a person, post, telephone, e-mail, and website,” as per the regulation.
“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices, branches and direct sellers through a person, post, telephone, e-mail, and website,” as per the regulation.
It adds: “Every direct selling entity shall ensure that such registration number is displayed prominently to its users in a clear and accessible manner on its website and each invoice issued for each transaction.”
In addition, such companies would have to maintain a record of direct sellers working with them, including their ID proof, address proof, email ID, and other contact information.
Source: moneycontrol
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March 29, 2022
Writankar Mukherjee & Sagar Malviya, Economic Times
Kolkata / Mumbai, March 28, 2022
The war for instant grocery delivery is going to intensify with Reliance Retail entering the segment with its JioMart platform. The company will start the trial in next 2-4 days in Navi Mumbai for ‘JioMart Express’ which will sell and deliver around 2,000 stock keeping units (SKUs) in a few hours, two senior industry executives aware of the plans said.
Reliance has plans to take instant grocery sales to over 200 cities and towns where JioMart is currently operational by end of next quarter and double the reach in next few months to make it India’s largest instant grocer. The company will also tap its network of kirana stores for such fulfillment, apart from its own chain of grocery stores, the executives said. It is testing a separate app for express grocery deliveries as well as integrating it into the JioMart platform.
The plans of India’s largest brick-and-mortar retailer to enter quick commerce is to further grow its e-grocery business and Reliance will compete against Tata-owned Big Basket which will launch it in April, Zomato-funded Blinkit, Swiggy’s Instamart, Walmart-owned Flipkart Quick and Zepto. Earlier this year, Reliance had led a $240 million funding round in quick commerce hyperlocal firm Dunzo owning the largest 26% stake.
“JioMart Express will utilize Dunzo in the markets where it is strong like the metros as well as its own delivery fleet. JioMart Express can be quickly scaled up since Reliance has onboarded lakhs of kiranas under its B2B programme ‘JioMart Partner’ who buys the merchandise from Reliance and sells through the JioMart platform,” an executive said.
An email sent to Reliance Retail remained unanswered till Sunday press time.
Devangshu Dutta, chief executive of consulting firm Third Eyesight, said Reliance needs to ensure that it is in the right catchment which has a high concentration of demand, low competition and keep supply centres close to it to make instant grocery service profitable. “Margin contribution is low in grocery and hence apart from these there could be a higher focus on high margin products in the assortment,” he said.
To be sure, quick commerce is not new for Reliance Retail. It has been delivering orders in less than three hours placed through Reliance Digital online or app for smaller consumer electronics such as mobile phones and laptops. “However, order volumes are going to be much more frequent in grocery, and hence it would need a robust backend and delivery fleet,” an executive said.
While the pilot in Navi Mumbai will start with 1-3 hours delivery time, Reliance will progressively reduce the delivery time to match the industry standard of 45 minutes to an hour and will also expand the range. According to researcher RedSeer, India’s quick commerce market is all set to grow 15 times by 2025 reaching a market size of close to $5.5 billion. Online shoppers in the metros have been using quick commerce for their unplanned and top-up purchases.
(Published in Economic Times)
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November 28, 2021
By Rasul Bailay & Writankar Mukherjee, Economic Times
November 27, 2021
Reliance Retail aims to be one of the world’s top retailers, but for the last couple of years, it has been a buyer, not a seller. It has bought a string of retail brands — from online pharmacy Netmeds and online furniture retailer Urban Ladder to digital lingerie seller Zivame, online grocer MilkBasket and haute couture label Ritu Kumar. The latest acquisition was Sri Lankan lingerie brand Amante.
These acquisitions are crucial cogs in Reliance Retail’s further push into brick-and-mortar and ecommerce, and are part of Mukesh Ambani-led Reliance Industries Ltd (RIL) unit’s larger strategy: To break into the global top ten retailers. India’s largest retailer (by sales as well as by the number of stores) is currently ranked 53rd in the world, according to Deloitte’s Global Powers of Retailing 2021. Reliance Retail reported an annual revenue of $22 billion and a net profit of $750 million for the fiscal year ending March 2021.
At the same time, the company is looking beyond pure retailing. It’s pursuing a larger play to tap into the growing pie of the country’s overall consumption story — from contract manufacturing to distribution of everything from affordable fashion and consumer electronics to grocery products in India’s $850 billion annual retail market that is expected to swell to $1.3 trillion in the next few years. (Reliance did not respond to ET’s questionnaire.)
Analysts say Reliance’s overall plan is to engage India’s burgeoning consumers in its ecosystem one way or the other at any given point of time: shopping in its vast network of physical stores or on JioMart ecommerce platform, using Jio’s mobile or WiFi networks, watching movies on Jio Cinema, paying through Jio wallet so on and so forth that it is dubbed by the petroleum-to-telecommunications conglomerate as “retail plus” strategy.
“Their plan is to weave their products and services so deeply into your life that from morning to evening you are spending time and money on their networks either directly or indirectly,” says a top executive of an online grocery retailer. “Their idea is to constantly keep consumers engaged in a Jio bubble or in a Jio world.” The executive estimates India has a middle class of around 40 crore people. “Even if they succeed in capturing 10% of that wallet share, it is going to be huge,” he says.
That’s the reason Reliance Retail is betting big on business-to-business (B2B) ecommerce, with a digital wholesale marketplace along the lines of Alibaba for products such as smartphones, televisions, garments and grocery items, among other products, according to people aware of the plan. It’s looking to service a whole gamut of retailers in cities and villages.
Reliance has already started distributing its licencee products of Kelvinator- and BPL-branded consumer electronic items and its smartphone JioPhone Next, produced in collaboration with Google, to retailers outside of Reliance’s stable. The company also boasts a whole host of private brands and many of them are making inroads into general trade.
“The market for modern retail and ecommerce put together would be 15-20% in India. The rest 80% is still in the traditional market. If Reliance can make an entry into the traditional market and partner the smaller stores, the opportunity for growth and revenue is much more,” says an industry executive aware of the plans.
“Reliance’s approach is not to be a threat to small stores or merchants, but to be their enabler, provide them merchandise at best wholesale rates, upgrade their stores and even list them on their ecommerce platforms to help them reach newer consumers,” he adds.
Reliance is doing exactly that. Earlier this year, it started supplying Puric InstaSafe-branded FMCG products like soaps, home disinfectants and sanitisers to kiranas in Punjab and West Bengal. It is planning to roll these items nationwide. The company has put in place a marketing team for the first time to push these products. Similarly, B2B portal Ajio Business is selling T-shirts for Rs 79 onwards, a pair of jeans for Rs 220 and shirts for Rs 170 onwards to small businesses. Last quarter, Reliance Retail forayed into the wholesale business of medicines through Netmeds by roping in neighbourhood pharmacies under its B2B initiative.
These are some of the steps in the conglomerate’s bet not just on pure retail play but on end-to-end gameplay in the retail ecosystem, controlling manufacturing, wholesale, supply chain, ecommerce and payments.
To augment its digital wholesale plans, Reliance Retail has already converted its network of cash-and-carry outlets into fulfilment centres.
Analysts say Reliance’s ambitions are long-term and capital intensive and the company is ready for the long haul and to spend. “Reliance’s plan to rope in and aggregate many elements together — retailers, B2B buyers, suppliers, small players — and bring them on board takes time and is a capital-hungry business,” says Devangshu Dutta, chief executive of consulting firm Third Eyesight. “But controlling end-to-end is Reliance’s game plan in any business, including telecom, where it spans the entire value chain of not just providing the mobile network but also a digital interface with consumers.”
In a bid to feed its ambitious consumption plans, Reliance Retail is lapping up stores and warehouses nationwide to service both ecommerce and B2B sales through its “new commerce” omnichannel plans that will also involve legions of kiranas as last-mile delivery agents as well as buyers of Reliance’s products. Reliance Retail, which operates more than 13,000 stores of various formats, plans to open around 5,000 outlets of its Smart Point that would entail a convenience store, a pharmacy, agnostic centre, a telecom services and financial services products outlet all rolled into one across the country.
Reliance is planning to take this format to even tehsils, according to sources. Real estate agents and mall executives say Reliance is scouting for space for supermarkets, fashion outlets and jewellery and footwear stores.
They say Reliance is also planning to enter newer retail formats like a department store chain to compete with Shoppers Stop and Lifestyle. Also in the works is a Sephora-style beauty and cosmetics chain, they say.
“We will focus on expanding our store footprint multifold this year with co-located delivery hubs over the next few years. They will provide a strong network to reach and serve millions of merchants and customers,” Ambani said at the last AGM of shareholders.
Deloitte’s Global Powers of Retailing 2021 report ranked Reliance Retail as the world’s second fastest growing retailer, behind South Korea’s Coupang Corp.
Global financial and tech titans have taken notice of Reliance Retail’s play and pumped billions of dollars into it. Last year, the holding company Reliance Retail Ventures Ltd raised Rs 47,265 crore by selling about 10% stake to some of the biggest names in global private equity, including Silver Lake, KKR, General Atlantic, Abu Dhabi Investment Authority and TPG.
Reliance will continue with its acquisition spree, say analysts. However, Reliance Retail’s largest, the Rs 25,000 crore acquisition of Future Group, is bogged down by Amazon’s opposition to the proposed deal.
(Published in Economic Times)
