Raghavendra Kamath, Business Standard
Mumbai, May 31, 2014
Almost eight years after its launch, Mukesh Ambani’s Reliance Retail is ready to launch a multi-channel retail operation, which would integrate its physical stores with an e-commerce portal.
The Reliance Retail team is working on the model and the company is looking to launch it this year, said sources in the know.
While Reliance has e-commerce portals in some of its international fashion brands and a website for its consumer electronics, it is for the first time that the company is exploring e-commerce in value business, digital and fashion, which accounted for nearly 90 per cent of its revenues in FY 2014.
"Since they have a large network of stores, they will enable shoppers to place orders anywhere and get it delivered anywhere they like," the sources said.
Reliance Retail is the largest retailer by revenues and runs 1,691 stores spread across a 11.7 million sq ft space in 146 cities. In FY 2014, the retailer made revenues of Rs 14,496 crore and profit-after-tax of Rs 180 crore.
Reliance’s e-commerce plans come at a time when e-commerce portal Flipkart has hit the $1 billion (Rs 6,000 crore) mark in gross merchandise value and Snapdeal is looking to achieve the target this year. Moreover, the world’s largest online retailer Amazon has already become the largest in India too, in terms of the number of products on the site.
Reliance Industries’ annual report for FY14 clearly indicated the plan. "The business is poised to launch multi-channel shopping in the coming year. The potential of e-commerce, combined with the network of physical store locations will offer tremendous choice and convenience at a great value to the consumer," the company said in the annual report.
Devangshu Dutta, chief executive of retail consultancy ‘Third Eyesight’ believes that offline retailers such as Reliance have an edge in e-commerce given that they have already established a customer connect.
However, he added that e-commerce will not help boost Reliance Retail’s revenues significantly in the short term as it is still in its nascent stages in India.
In 2012, Mukesh Ambani had said the company was expecting Reliance Retail to clock Rs 40,000-50,000 crore in the three-four years.
"Customer acquisition and repeat customers is a big issue for e-commerce ventures. But physical retailers have an edge as they already have a connect with customers," Dutta added.
Dutta says retailers going online should have different strategies in marketing communication, supply chain and merchandising for both the formats as customer mindsets are different in both.
While Kishore Biyani’s Future group has an e-commerce venture called Futurebazaar.com, the group is focusing on its new venture Bigbazaar Direct, where franchisees armed with tablets provided by the company take orders and sell the best deals of Big Bazaar.
Asked why Reliance took so long to launch an e-commerce-led strategy, the sources said: "It is a question of what they will do and when they will do. They cannot do it for the sake of doing it or because others are doing it."
In the report, Reliance had said the expansion of Digital express Mini and its cash-and-carry format Reliance Market would be key priorities for the company.
(Sourced from Business Standard.)