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As Facebook, the world’s largest social media company, invests $ 5.7 billion for a 9.99 percent stake in Reliance Jio Platforms, the deal is also seen as a powerful alliance to take on formidable players in e-commerce and space. payments like Amazon, Flipkart and Google
The association is expected to help JioMart, the Reliance e-commerce company led by Mukesh Ambani, take on players like Amazon and Flipkart in the Indian online commerce market, backed by Facebook. According to industry analysts and analysts, market opportunities for online commerce in the country are expected to reach $ 200 billion by 2028 from $ 30 billion in 2018.
“(From the investment made by Facebook), there would be around Rs 15,000 crore with Jio, and this is a huge amount that JioMart can use to build its (e-commerce) network. If they can successfully execute this on the ground, I think they are going to create massive problems for Amazon and Flipkart because of the kind of scale they can achieve, “said Satish Meena, forecasting analyst at Forrester. Research.
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For starters, Meena said, JioMart is expected to aggressively pursue the grocery store space, where they can reach large numbers of homes and work in such a way that customers end up buying many Reliance services, related to areas such as devices. mobiles. connection, television, music and education. “The biggest concern for Amazon and Flipkart now is to reevaluate their business or logistics model, as they cannot meet the demand for groceries. There is a lot of demand, but companies are not ready to meet. “
According to Salman Waris, managing partner of New Delhi-based tech-law firm TechLegis Advocates & Solicitors, backed by the investment that makes Jio the fifth largest firm in India, the company can also create a ‘ e-commerce monopoly ‘and improve E-commerce Ecosystem.
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“Facebook wants to use WhatsApp for e-commerce opportunities with small companies. Amazon, Flipkart cannot compete with Jio-Facebook because they do not have an advantage over the data. Although in the short term, there may not be much impact in the market since due to Covid-19 nothing significant will happen in the next 3-6 months, however, in the long term, the alliance will not only counter competitors like Amazon and Flipkart, but to break the entire e-commerce ecosystem in the country, “said Waris.
Waris said that while Facebook would take advantage of Jio providing internet access in India, this partnership threatens the very concept of net neutrality due to Jio’s advantage in the data. It could lead to even deeper anti-competitive tactics, like deep discounts.
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Nirupama Soundararajan, Head of Research and Principal Member of the Pahle India Foundation (PIF) said that Jiomart will be a company to be reckoned with. “There will be disruptions in the market. The proposed model for Jiomart is new (since) it seeks to co-opt the Kirana stores. Such collaborations are necessary. We can also see a significant increase in P2P (peer-to-peer) payments due to WhatsApp. Kirana stores will also have to prepare to compete with each other. It would be interesting to see if this would create price wars between Kiranas, “said Soundararajan.
He also said that the Indian retail trade policy framework is very complicated and lends itself to significant arbitrage between the formats and the origin of capital. “With the arrival of Jiomart, this regulatory arbitrage between large foreign and domestic players could affect future FDI,” said Soundararajan.
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The deal is also expected to help Reliance and Facebook take on players like Walmart-owned PhonePe, Alibaba-backed Paytm, Google Pay, and Amazon Pay in India’s digital payments space, which is expected to multiply by five to reach $ 1 billion in 2023. India is the largest Facebook user base with around 328 million monthly users, while the company’s WhatsApp messaging application has 400 million users in the country, also the most high in the world. WhatsApp is trying to get approval to implement its digital payment service, while the company also has plans to offer digital payment services dedicated to small supermarkets.
“The Facebook-Jio deal is the union of one of the world’s largest data platforms and India’s largest data platform. There are multiple battles here (likely to be fought), including one over dominance in the e-commerce space and another for digital payments. In digital payments, applications such as Paytm and PhonePe already face cash problems and this will be forced to join the Jio and Facebook platform, “said Waris.
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According to Tarun Pathak, associate director of Counterpoint Research, the Jio-Facebook deal is an attempt to unite local commerce with the social side. “We believe that electronic commerce will change when the next 300 million join the digital platform in the coming years. It will demand a localized approach and therefore both companies will seek to take advantage of the trend and ultimately this will also be a boost for Facebook’s ad platform, “said Pathak.
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