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India's Richest Man Is Getting WhatsApp's Help in Effort to Crush Amazon and Walmart

By Harsh Chauhan - Jan 21, 2021 at 11:37AM

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The American giants have reason to worry in this fast-growing e-commerce market.

Mukesh Ambani -- India's wealthiest man -- entered the country's e-commerce market with a bang last year and take on American heavyweights Amazon (AMZN -7.41%) and Walmart (WMT -7.02%). Ambani's JioMart e-commerce venture scaled up rapidly in a short time, thanks to parent company Reliance Retail's already extensive physical footprint across the country.

JioMart is now all set to scale up to the next level, thanks to its partnership with Facebook (FB -4.68%), which invested $5.7 billion in Ambani's Jio Platforms venture last year for a 9.99% stake. At that time, Ambani had spoken of his intention to connect local shopkeepers with their customers digitally using WhatsApp -- Facebook's instant-messaging service. And now, Reliance Retail has announced that it will embed the JioMart app within WhatsApp in a move that could rapidly expand its reach.

Indian flag on a keyboard button next to the e-commerce button.

Image source: Getty Images

JioMart makes a big move

Citing two anonymous officials, the Indian financial publication Mint reports that JioMart will be embedded into the WhatsApp instant-messaging application in the next six months. This will allow more than 400 million WhatsApp users in India to order products from JioMart without leaving the messaging service. In simpler words, WhatsApp users can simply open the messaging app and place JioMart orders seamlessly, which eliminates the need for a separate application.

What's more, WhatsApp recently started operating its payments service in India. Around 20 million users in the country can now use WhatsApp Payments to send or receive money in a seamless manner from within the messaging app. The integration of JioMart and the payments service into the instant-messaging service will make it easier for local shopkeepers to transact with their customers.

This is what Reliance Retail had originally intended to do. Ambani had pointed out last year that the JioMart-Facebook partnership's aim will be to help 30 million local shops in India to transact digitally with their customers in the neighborhood. WhatsApp is now going to play a key role in helping Reliance Retail achieve that goal, given its wide reach in the country and augment JioMart's terrific growth.

Why Amazon and Walmart need to be worried

JioMart has made a big splash in India's online grocery market, fulfilling a higher number of orders on a daily basis than its rivals within just a few months of launch. The addition of Facebook's WhatsApp into the mix is expected to make things even more difficult for JioMart's rivals, as the upstart is expected to corner half of India's online grocery market by 2025, as per Goldman Sachs.

That's bad news for Amazon and Walmart, as online grocery sales in India are growing at a terrific pace. According to management consulting firm RedSeer, the gross merchandise value (GMV) of India's online grocery market jumped to $3 billion in 2020 from $1.9 billion in 2019, thanks to the novel coronavirus pandemic. The market is expected to maintain this terrific momentum in the future and hit $18 billion in GMV by 2024.

JioMart's impressive growth in recent months and its strategy of using WhatsApp to boost its reach put it in a solid position to take advantage of this fast-growing opportunity and hit the ambitious market-share figure Goldman is forecasting. Such a scenario doesn't bode well for Amazon and Walmart, which have a much smaller footprint.

Amazon reportedly has 60 fulfillment centers in India and access to 600 stores of More Supermarkets, in which it holds a 49% stake. Walmart, on the other hand, operates 29 cash-and-carry format stores in the country, some of which it's looking to convert into fulfillment centers for Flipkart -- its e-commerce operation in the country. However, Flipkart's grocery business is still in its nascent stages, as the company recently opened its first grocery-fulfillment center in the northern part of the country.

Reliance Retail seems to be in a much better position than its rivals, as it has a network of more than 800 supermarket stores selling fresh produce and groceries across 200 Indian cities. The company can use these stores to ensure a regular supply of fresh goods to local shopkeepers, helping them meet the demand of their local customers.

JioMart has already signed up close to 56,000 local shopkeepers across 30 Indian cities to sell products directly to customers. The company plans to expand this network to 100 cities across India over the next few months so that it can speed up deliveries of orders made on the JioMart platform. All of this indicates that JioMart isn't willing to give an inch to its American rivals in India.

That could spell bad news for Amazon and Walmart in the long run, as JioMart intends to expand into more categories such as smartphones, fashion, and consumer electronics in the future. JioMart is also planning to offer more discounts in a bid to win market share from Amazon and Walmart, which reportedly hold just over 63% of India's e-commerce market.

A potential loss of market share in India won't paint a good picture for Amazon and Walmart. The country's e-commerce market is expected to hit $200 billion in revenue by 2026, and both companies can win substantially if they control large parts of it. But upstarts such as JioMart could upset Amazon and Walmart's apple cart in India, costing them an opportunity to make the most of the world's fastest-growing e-commerce market.

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