The Reliance juggernaut seems unstoppable today. Jio’s win of the telecom war was both unprecedented and spectacular. The business acumen Reliance showed by finding a path to clear debts even during a pandemic was awe-inspiring. Startups like us can learn a thing or two from the Ambani empire on how to run a business or use capital and reputation optimally. Still, Reliance’s foray into e-commerce is, I feel, bound to be a mediocre success or a failure. Here is why.
1. FMCG is not telecom
Telecom is a closed, heavily regulated garden. The power of capital and “right connections” matter far more. It is a push market where consumers have limited choices, and a new brand can take over the market if they pour enough capital and buy enough availability through bandwidth and infrastructure along with discounting. Unlike telecom, FMCG is driven by consumer preferences rather than availability or capital. It’s a highly fragmented entrepreneur-driven market, especially in traditional trade in a country like India. Besides, globally the trend is moving more and more towards insurgent brands thanks to digital empowerment.
2. Lack of Consumer mindset
Can you think of any Reliance product that has a consumer recall other than Vimal? Reliance does well in the B2B and regulatory-driven segments where the right connections can make or break a business. However, from Reliance Retail, Footprint, JioSaavn, JioCinema to Jio Phone, the company has not built or launched an aspirational consumer product or service. Building such a product needs far more investment in product development, brand building, and quality of service delivery. JioMeet is one such recent example, and this kind of tacky product launch of an aspirational next-gen product highlights how Jio is missing the consumer pulse entirely.
3. Throwing more money ≠ better tech product
E-commerce or any online commerce is a mix of technologically superior products backed by operational excellence. I would bet my life on Jio getting the operational excellence part correct, but building a tech product is a different ball game altogether. It needs the right team rather than a large or expensive team. Also, the right team cannot be built just by throwing money at it; there needs to be a mission behind it. Based on the evidence, we can surmise that Jio platforms do not care much for the product or tech mission which typically enthuses a great tech team.
4. Lack of leadership within the team
Visionary senior leaders at Reliance like Manoj Modi are nearing their retirement age, and the nextgen is yet to make an impact. Jio may solve the leadership issue through the teams of its acquired companies. But it’s not clear which next-gen team will drive the transformation of Reliance to a “consumer” company.
5. Lack of channel mindset
Reliance typically owns things. It wants to own warehouses. It wants to own retail outlets. India’s FMCG works around a complex, fragmented maze of entrepreneurs who want to run their distribution, wholesale or retail business. To succeed, Jio will have to figure a way out to make them part of the Jio supply chain network while preserving their own identity and entrepreneurial spirit. Jio has not shown an inclination towards such partnerships.
Bonus: Reliance Culture
Large digital platforms like Amazon, Apple, Microsoft, Google, Alibaba or Facebook built their businesses with a relentless focus on consumers. There is a saying that Jeff Bezos is so customer-obsessed that there is an empty chair for a customer in every meeting. Some of my friends who worked in Reliance at senior positions have mentioned relentless focus on money. A few Reliance vendors will vouch for that as well. While this money focus is excellent for investors, it does not help build great consumer products and brands.
At the peak of performance, it would seem impossible that a winner could lose the next battle. But as times change, things that work for a business in the past are the same things that could hurt them during a transformation. While JioMart is a great step for Reliance to enter into the digital e-commerce world, based on evidence, I am inclined to say that this particular foray is bound to fail.