Reliance Industries Limited has been on an overdrive when it comes to diversification. The company has entered a range of services in the recent past including telecommunications, which has been extremely successful. Jio has taken the telecom market by storm and is the fastest growing network in India. Now Reliance is looking to leverage the popularity of Reliance Jio in rural areas with the launch of Reliance Jio hubs.
One stop destination store: Jio Hub
Reliance is all set to launch Jio hubs, which are essentially stores that will be selling and distributing items that are manufactured by Reliance Industries. The stores will be located in rural areas and will be selling everything ranging from groceries to electronic gadgets. The stores are being marketed as a one-stop shop for all its consumers, who can shop for all of RIL manufactured items in these stores. The hubs are expected to replicate a mall-like experience in rural areas.
This move is unsurprising considering the rural market for retail supermarket chains and online shopping experiences is largely untouched and with plenty of potential for sales and growth in these regions, Jio has decided to take a plunge into the Reliance Jio hubs. According to a source close to the company, this project is only secondary to Reliance’s Jio GigaFiber broadband services, which it has only recently rolled out to the public this August.
Mukesh Ambani’s Dream:
According to the source “It is the chairman’s (Ambani’s) pet project. The company has realised that it has to reach small towns to get big volumes”. The company is in line with Reliance’s CEO’s vision of a single brand selling retail, consumer goods, telecom, and other services. The launch of the stores is also in line with the company chairman, Mukesh Ambani’s thoughts which he echoed during a recent AGM meeting a couple of months back. He commented, “We see our biggest growth opportunity in creating a hybrid, online to offline new commerce platform.”
An analyst from the retail sector commented “Small towns need assisted e-commerce and the comfort of a physical space where after-sales service is also available. Reliance Jio Hubs could showcase what is available and act like experience centers. Most importantly, these hubs could also hold inventory and act as warehouses as it satisfies the 100 percent India owned requirement under the draft e-commerce policy.”
He also went on to add “The Company plans to set up close to 800 such Reliance Jio Hubs which will sell all consumer items under Reliance. The investment required for setting these up will be finalised within a month”. The draft e-commerce policy, which was floated by the government in August, mentioned that only Indian owned firms will be allowed to store inventory, meaning even if a foreign investor has a stake in an e-commerce firm, the actual distribution can only be done by an Indian fronting company.
Expected Growth:
Popular researching company, eMarketer’s report suggested that, while growth through online sales had more than tripled since 2015 it is still expected to contribute only 2.9 percent of total retail market sales. With most retail sales in India still being conducted through offline mode, Reliance is looking to penetrate this market and gain a piece of the action. The company already has more than 5000 Jio Points, which are essentially customer service centres for Reliance Jio in rural and semi-urban localities and may leverage this service to start operations for Reliance Jio hub.
The post Reliance Jio Hubs to Sell Electronics to Groceries in Smaller Towns: Here’s How They Operate appeared first on MySmartPrice.
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