By Shambani Anand & Rasul Bailay – The Economic Times
Reliance Retail-Digital store, credit Reliance Industries India
NEW DELHI, April 17, 2019 – As a precursor to the launch of its own business-to-consumer marketplace that will sell everything from food to fashion, Mukesh Ambani, Reliance Industries’ chairman has started withdrawing its clothes, shoes and lifestyle products from would-be rival marketplaces like Amazon and Flipkart. These include its own as well as global brands for which the group has selling rights in India.
The process of withdrawals has gathered pace in recent months as Reliance Industries prepares for its major online initiatives later this year, according to three people aware of the development.
The company’s retail division Reliance Retail has the largest highest number of global fashion and lifestyle brands in its stable with around four dozen joint ventures or master franchisee arrangements with international labels including Diesel, Kate Spade, Steve Madden, Burberry, Canali, Emporio Armani, Furla, Jimmy Choo and Marks & Spencer. Many of these brands are sold online on Amazon, Flipkart, Myntra, Jabong and Tata Cliq, among others
BID TO CREATE EXCLUSIVITY
Reliance wants to create exclusivity for global as well as its own brands to attract consumers to its portal. Reliance Trends and Reliance Brands have been asked to expedite the phasing-out process from non-Reliance marketplaces in the coming weeks, sources said.
“Reliance has stopped taking new orders. Whatever is available on the third-party marketplaces will be sold till the stocks are exhausted,” said a person with direct knowledge of the development. Reliance Retail did not respond to an email seeking comments.
Another person said Reliance Brands, the flagship subsidiary that holds rights for the majority of global brands, has been instructed by the head office to stop supplies to third-party marketplaces from this month. “They have been told to sell only on Ajio-.com and through their own mono-brand sites for different labels,” the person said, asking not to be identified. Reliance Brands clocked revenue of about $48 million in fiscal year 2018.
Mukesh Ambani unveiled the conglomerate’s plans for a “hybrid online-to-offline” venture in July 2018 that would take advantage of the synergies Reliance Jio Infocomm and Reliance Retail’s stores.
The Economic Times has reported that Reliance Retail is planning a business-to-business marketplace as part of its comprehensive omni-channel strategy that would enable large suppliers and distributors to carry out business with millions of small traders and kirana stores.
It has big plans for the B2C marketplace too. Reliance already operates online fashion platform Ajio.com, which also sells global and Indian brands outside of the group’s stable.
Market watchers believe Reliance has an edge over foreign-funded players such as Amazon and Wal-Mart-owned Flipkart after the government updated its regulations on foreign direct investment (FDI) in ecommerce marketplaces in December.
The two FDI-funded online marketplaces can only act as technology platforms that connect independent sellers and buyers. They cannot sell, own or control inventory. However, an Indian firm with no foreign investment can exercise control over inventory, thereby controlling pricing, quality and speed of delivery — key elements for the success of any e-commerce firm.