A report from BofA Global Research claims that the Mukesh Ambani-led Reliance Industries’ e-commerce arm JioMart has moved leaps and bounds in the online grocery delivery segment in the country and is inching closer to market leader BigBasket’s monthly and daily active user base.
Kotak Institutional Equities conducted a survey of 100 grocery retailers that have collaborated with JioMart in Bengaluru, a city where the entity has notched 20 per cent market shares amongst distributors. The findings revealed that JioMart has rolled out cheaper rates to retailers and even grabbed a larger share amongst distributors as compared to even competitors like Amazon.
“All respondents mentioned that B2C orders from JioMart’s portal are being supplied and delivered to households directly by the retailers; this is contrary to Mumbai, wherein most retailers were providing only last-mile delivery for products supplied by JioMart,” the report clarified.
Analysts, however, believe that JioMart can onboard more ‘kiranas’ as grocery and food tend to amount for the majority of the sales at the concerned retailers, Mint reports.
The BofA study that took into account the recent trends of key applications in India as per the Sensortower data of February 2021 mentioned, “The DAU/MAU ratio, a function of retention, is also highest for Big Basket and JioMart at 17% and 16% respectively.”
In fact, distributors are also insistent to stock Reliance’s private label products from different categories such as Enzo, Masti Oye, Expelz, Mopz, Kaffe, Best Farms, Good Life, Home One amongst others. Around 37 per cent of Mumbai’s retailers stock JioMart’s private label products whereas only 13 per cent of retailers keep private label goods of other distributors like Metro and Amazon.
Majority of the e-commerce retailers are storing in-house brands that give them better profit margins. “A better way to look at this is to look at only those 32 retailers with a partnership with Amazon – only 22% of these retailers stock Amazon’s private label products implying that pushing private label is an important part of JioMart’s distribution strategy,” the report added.
Overall, Reliance Retail has a 20 per cent market share amidst organized players in the grocery sector and 5 per cent of the same in fashion retail. More importantly, Reliance’s share in the grocery sector is 40 per cent greater than the second-largest player DMart and 50 per cent more than competitors like Aditya Birla Fashion (ABFRL) in the latter.
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JioMart Grabs 20% Share In Bengaluru, Can Overtake Big Basket Soon: Find Out Why?
JioMart has gotten closer to market leader BigBasket’s. JioMart’s availability in cities where the other apps didn’t work contributed to its popularity!
According to a report by BofA Global Research, Reliance Industries’ e-commerce venture JioMart has gotten closer to market leader BigBasket’s monthly and daily active user base.
“The DAU/MAU ratio, a function of retention, is also highest for Big Basket and JioMart at 17% and 16% respectively,” said BofA which has based the findings on the latest trends of key apps in India according to Feb-21 Sensortower data.
Jiomart, The Strengths Of Reliance Jio And Reliance Retail
JioMart offering more than 50,000 products in the fruits and vegetables, dairy and bakery, staples, snacks and branded foods, beverages, personal care, home care and baby care categories, according to its website.
“Farm produce will directly be sourced from farmers that have collaborated with the brand,” said the JioMart website.
Kotak Institutional Equities surveyed 100 grocery retailers, which have partnered JioMart in Bengaluru, and found that the Reliance Industries’ entity is not only offering cheaper prices to retailers but also has a much larger share of the distribution pie compared to competitors such as Amazon.
Last year During RIL’s annual general meeting some time back, chairman Mukesh Ambani had hinted at the company’s foray into ‘new commerce’ which, he said, was a $700-billion opportunity.
“The main purpose of new commerce is to completely transform the unorganized retail market, which accounts for 90% of India’s retail industry. The three crore merchants and Kirana shop owners, who generate direct and indirect livelihoods for over 20 crore people, form the backbone of India’s commerce eco-system,” he had said.
Why JioMart the next big thing in online grocery retail?
JioMart also has the advantage of being able to integrate with WhatsApp. During the nationwide lockdown, JioMart’s availability in cities where the other apps didn’t work contributed to its popularity. JioMart was quick to act and expanded to over 200 cities.
JioMart clocked big numbers during the lockdown, Reliance said in its first-quarter earnings report (April-June) – over 400,000 orders in a single day. JioMart continues to scale-up quickly, according to the company, with a consistent increase in daily customer orders in the second quarter.
The Goldman Sachs report showed that the new app downloads for JioMart in recent weeks have been double than BigBasket and Grofers put together.
It was clear during Facebook’s $5.7 billion investment in Reliance Retail in April that Reliance Retail will use WhatsApp’s huge user base in India to reach out to new customers. In exchange, WhatsApp Pay’s potential integration with JioMart would give Facebook’s payments feature a much-needed boost.
“RIL’s foray into the space leveraging its large of?ine distribution capabilities, and integration of ability to order groceries through WhatsApp, a platform with >400 mn MAUs in India,” said the report about Reliance’s stronghold in grocery.
Its presence across India, as well as its offline-to-online approach through partnerships with Kirana stores, gives it an advantage over competitors. India’s Kirana retail network of millions of stores remains the country’s primary source of grocery sales. Retailers earn their product margins besides an average delivery charge of Rs15-20 per order. Not only retailers, but users also enjoy huge discounts and offers.
“India has 10 million Kirana stores, which account for 90% of grocery retail. JioMart has already launched in more than 200 cities, leveraging Reliance Retail’s store network, with Kirana partnerships across 20 cities,” said the Goldman Sachs report.
“All respondents mentioned that B2C orders from JioMart’s portal are being supplied and delivered to households directly by the retailers; this is contrary to Mumbai, wherein most retailers were providing only last-mile delivery for products supplied by JioMart,” as per a report.
JioMart Is Fast Closing the Gap With BigBasket: Soon Become The Market Leader?
Mukesh Ambani’s JioMart is posing to be a tough competitor for BigBasket as it is inching closer to the latter’s daily and monthly userbase.
According to a report by BofA Global Research, the DAU/MAU ratio of JioMart is at 16% whilst that of BigBasket is currently 1 point higher at 17%.
Since its launch in May 2020, JioMart has been able to successfully corner 20% market share amid grocery distributors in Bangalore. A survey conducted by Kotak Institutional Equities found that the RIL’s O2O aka offline-to-online entity is not only offering low prices to retailers but also happens to have a much bigger share of the distribution pie when compared to its rivals such as Amazon.
That being said, industry analysts believe JioMart has the potential to onboard a far more number of kiranas as it is continually improving its service levels. Currently, retailers who are tied up with JioMart earn the margins on products sold along with an average delivery charge ranging from anywhere between Rs 15-20 per order.
Reliance Retail, which is a wholly-owned subsidiary of RIL, launched JioMart amid the chaos fuelled pandemic in 2020. At present, Reliance Retail, with over a whopping 3,500 stores, is the retail king of India, and it is the only one that has its presence across all verticals such as electronics, fashion, grocery and more.
Note here that JioMart’s distributors are currently also pushing Reliance’s very own private label products. As of December, close to 37% of Mumbai retailers stock JioMart’s private label products, whilst only 13% of retailers stock the private label goods of Amazon and Metro.
Reliance Retail sells everything from food, home improvement products, personal care, and general merchandise under its own brand names such as Good Life, Masti Oye, Best Farms, Kaffe, Expelz, Home One and more.
A majority of e-commerce retailers, including grocery firms and others, are becoming increasingly more interested in housing such in-house brands as they offer better margins than other big brands that have long been dominating the FMCG space.
JioMart has two ways in which it engages with small retailers. First, by being a distributor and supplying products to retailers and then by utilising the network of kiranas to fulfil orders placed on JioMart.
When it comes to the grocery segment, Reliance Retail has a 20% share amid the organised players in the market and is 40% larger when it comes to the second biggest player DMart. In the fashion segment, the company has a 5% share in organised retail and is 50% bigger than its peers, such as Aditya Birla Fashion.
Lastly, Reliance Retail, with $6 billion in revenue, accounts for a whopping third of the country’s organised electronics retail and 12% of the overall electronics segment. And it also generates $10 billion in addition to that from connectivity or telecom revenues via Reliance Jio.
Thus, all in all, it now remains to be seen how will JioMart further expand its market share into India’s retail space. We will keep you updated. Until then, stay tuned.