Amazon and Walmart Don't Have the Edge on This Massive Opportunity

It is no secret that Amazon (NASDAQ: AMZN) and Walmart (NYSE: WMT) are looking to profit from the massive Indian retail market by tapping into offline channels. While Amazon has been busy making forays into far-flung villages by enlisting local shops to act as its points of sale, Walmart has been leveraging its existing retail locations to reach out to mom-and-pop stores.

But the American giants now have a challenger in the form of Reliance, an Indian conglomerate led by Asia's richest man, Mukesh Ambani. Reliance had recently fired a salvo at Amazon and Walmart when it stopped supplying its lifestyle and fashion products to third parties including those two so that it could sell them on its own platform.

Reliance now seems to be making another move that could clip Amazon's and Walmart's wings in India. It's reportedly working to supply neighborhood grocery vendors.

A drawing of one hand holding a smartphone and another tapping a grocery cart icon on the screen.

Image Source: Getty Images

Reliance's latest move threatens Amazon's and Walmart's plans

Indian business newspaper The Financial Express reports that Reliance has launched a pilot project to build a business-to-business (B2B) e-commerce platform for merchants selling fruits, vegetables, and groceries in local markets.

Sources cited by the newspaper say that Reliance has developed a mobile app -- Jio Prime -- that the merchants will need to sign up for. Once that's done, the vendors will be able to order products using the app, which will also handle inventory management. The app will reportedly save merchants money, but the biggest reason why vendors would flock to Reliance is because of its ability to provide them with a huge database of potential customers.

Reliance's telecom arm -- Jio -- is the second-largest telecom provider in the country with a user base of almost 323 million. The Financial Express reports that the vendors signing up to use the Jio Prime app will get access to the telecom arm's customer base so that they can directly inform potential customers of offers and products on sale.

This will give Reliance an upper hand as compared to both Amazon and Walmart. Walmart has been trying to tap mom-and-pop stores with its Mera Kirana program.  ("Kirana" is a mom-and-pop store in the Indian parlance, and "mera" stands for mine.) Through this program, Walmart has been helping mom-and-pop stores streamline their operations and also provides them with inventories from its cash-and-carry stores. But given that Walmart has a limited footprint of its cash-and-carry stores in India -- 26 to be precise -- it will be difficult for it to match Reliance's scale.

Reliance's grocery arm -- Reliance Fresh -- has over 560 locations in the country, selling more than 300 tons of vegetables and 200 tons of fruit on a daily basis. So Reliance can easily use these locations to fulfill the needs of local vendors it is looking to recruit.

The second stage of this pilot could be a big deal for Reliance

Once Reliance successfully tests the B2B platform, it can move to the business-to-consumer (B2C) model. As Jio already has a huge subscriber base in India, it wouldn't be very difficult for Reliance to launch a consumer-facing app that would allow users to order groceries and other items from their local merchants.

Reliance has a better shot at creating a truly offline-online hybrid model because of its existing scale in India. As a result, don't be surprised to see the company eventually dominate the country's grocery market, which is expected to cross a value of $700 billion by 2022.

Online grocery is still in a nascent phase in India, with annual sales of around $1 billion. However, the online grocery market in India is expected to grow nearly five-fold in the next three to four years. Reliance is making the right play by looking to tap this opportunity early and potentially leave Amazon and Walmart behind.

Find out why Amazon is one of the 10 best stocks to buy now

Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

Tom and David just revealed their ten top stock picks for investors to buy right now. Amazon is on the list -- but there are nine others you may be overlooking.

Click here to get access to the full list!


*Stock Advisor returns as of June 1, 2019


John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More