Why Facebook, Reliance Jio deal is a wake-up call for Amazon, Flipkart

Reliance Jio-Facebook deal is an attempt to marry e-commerce with social media, say analysts.

As Facebook, the world’s largest social media company, invests $5.7 billion for a 9.99 per cent stake in Reliance Jio Platforms, the deal is also seen as a powerful alliance to take on formidable players in e-commerce and payments space such as Amazon, Flipkart and Google. The partnership is expected to help Mukesh Ambani-led Reliance’s e-commerce venture JioMart to take on players such as Amazon and Flipkart in the Indian online commerce market, backed by Facebook. According to industry insiders and analysts, the market opportunities for online commerce in the country is expected to touch $200 billion by 2028 from $30 billion in 2018.

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“(Out of the investment made by Facebook) about Rs 15,000 crore would remain with Jio, and this is a huge amount which JioMart can use for building its (e-commerce) network. If they are able to execute this properly on the ground, I think they are going to create massive problems for the likes of Amazon and Flipkart due to the kind of scale that they can achieve,” said Satish Meena, a senior forecast analyst at Forrester Research.

To begin with, Meena said, JioMart is expected to aggressively chase the grocery space, where they can reach a large number of households and work in a way where customers end up buying a lot of services from Reliance itself, related to areas such as mobile connection, television, music and education. “The bigger worry for Amazon and Flipkart now is to reevaluate their business model or logistics as they are not able to fulfil the grocery demand. There is a lot of demand but companies are not ready to deliver.”