As a precursor to the launch of its own business-to-consumer (B2C) marketplace that will sell everything from food to fashion, Mukesh Ambani’s Reliance Industries 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 RIL prepares for its major online initiatives later this year, according to three people aware of the development.
RIL has the 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 other sites.
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.
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 monobrand sites for different labels,” the person said, asking not to be identified. Reliance Brands clocked revenue of Rs 336.41 crore in FY18.
RIL chairman Mukesh Ambani unveiled the conglomerate’s plans for a “hybrid online-to-offline” venture in July 2018 that would take advantage of the synergies between Reliance Jio Infocomm and Reliance Retail’s stores.
ET has reported that Reliance Retail is planning a business-to-business (B2B) 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 Walmart-owned Flipkart after the government updated its regulations on foreign direct investment (FDI) in e-commerce 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.