Reliance Retail Ventures into E-commerce to sell Groceries
sacchitjogi07 | 18 Nov 2014

The retail segment of Reliance Industries Limited (RIL) has now launched an online service that will home deliver fresh groceries, vegetables and fruits.

The retail segment of Reliance Industries Limited (RIL) has now launched an online service that will home deliver fresh groceries, vegetables and fruits.

E-Commerce in India

Reliance Retail's entry into the e-commerce space comes after the success of a number of start-ups such as Flipkart and Snapdeal that have generated billions of dollars in funding and are now expanding at an extremely fast pace. In addition to this, the online grocery market in India has also taken off quite well with players such as LocalBanya, BigBasket, MyGrahak and AaramShop.

According to Technopak, a consulting firm, over the next 6 years, it is expected that the Indian e-commerce sector will grow to become a $200 billion industry. Today, this sector is valued at $10 billion. This industry is currently dominated by travel related services and online retailing stands at generating $600 million a year. By 2020 this figure is expected to go up to $70 billion.

The Brick and Mortar versus E-commerce War

The strong growth exhibited by these online stores is proving to be quite a challenge for its physical competitors such as those operated by Future Group's Big Bazaar and Reliance Retail.

Recently, Kishore Biyani, the Chief Executive Officer of Future Group criticized Flipkart and other e-commerce retailers for the deep discounts they offered in their promotional sales during the festive season. It is his belief that this could significantly hurt other retail channels.

Reliance Retail's Venture into E-commerce

In spite of growing competition from e-commerce stores, Reliance Retail continues to be known as the biggest retailers in India by revenue. The company's September quarter revenues went up by 20% year-on-year to INR4,167 crores. Furthermore, its earnings before interest, tax and depreciation (EBITD) doubled to INR186 crores during this quarter.

Its online store is currently restricted to catering to shoppers in South Mumbai, Thane and Navi Mumbai. Consumers from these localities are able to order fresh fruits and vegetables by simply logging on to www.reliancefreshdirect.com. In addition to this, the website also sells dairy products, packaged foods, personal care products and confectionary items. The product offerings will be similar to those made available at the Reliance Fresh and Reliance Mart stores.

A spokesperson from the company said, "We continue to explore newer markets and channels to leverage our solid foundation. The launch of RelianceFreshDirect.com adds the 'direct delivery' channel to our network, besides convenience and choice to our valued customers. Over time we will certainly augment the direct delivery model."

This venture is operating through a subsidiary as a pilot project at the Reliance Corporate Park office in Navi Mumbai. Over the past year, the 10,000 employees here have been availing services through the Reliance Fresh-Project Director website. The company makes its deliveries to customers either through the nearest store or through alternative distribution channels.

While the company is yet to announce when it will extend its home delivery services to other cities, it is expected that it will rollout services to other geographies in phases.