Reliance Industries, one of India’s largest conglomerates, is expanding its e-commerce presence with the launch of Ajio Street, a new marketplace model for low-priced, longtail fashion items. According to the Economic Times, Ajio Street will operate on a zero-commission model. Here merchants can onboard the platform with a 15-day payment settlement offer. The platform aims to acquire fresh consumers from non-metro, Tier-II cities, and beyond.
Ajio Street to Compete with Meesho in Non-Metro Cities
The new platform will have a separate window on the Ajio platform and app. It will focus on non-metro cities and towns. Under the zero-commission model, the platform will not charge sellers any commission. Instead, it will try to monetize through advertisements or fulfilment services. The move puts Ajio in direct competition with Meesho. Meesho is a platform that allows resellers to sell low-cost products focusing on Tier-II and III cities and towns.
The primary rival of Ajio Street, Meesho, saw its net losses widen by more than six times in FY22. On a standalone basis, Meesho reported a net loss of INR 3,247.8 Cr during the period under review. This is up 550% from INR 498.6 Cr reported in the previous fiscal year.
Reliance Retail, a subsidiary of Reliance Industries, has also forayed into the beauty e-commerce category with a dedicated platform, Tira. The conglomerate is expected to unveil its first Tira store in Mumbai soon. It has plans to expand it further in the country going forward.
Reliance’s E-commerce Growth
Reliance Retail’s revenue from its digital and new commerce businesses saw a 38% YoY rise in the third quarter of FY23. Thus, accounting for 18% of its total revenue. This growth is significant, given that the total addressable market for Indian e-commerce is expected to reach $400 Bn by 2030, growing at a CAGR of 19% from 2022. The Indian e-commerce sector has garnered investments of over $31 billion since 2014. Currently, it has 24 unicorns and 15 soonicorns, highlighting the immense potential and attractiveness of the sector to investors.
The launch of Ajio Street represents Reliance’s deeper dive into the e-commerce sector, where it competes with Flipkart-owned Myntra, Tata Cliq, Nykaa Fashion, and others. The move to focus on non-metro, Tier-II cities, and towns aligns with Reliance’s strategy to cater to the underserved market segments. With Ajio Street, Reliance hopes to acquire a fresh set of consumers. Consumers who are not yet frequent online shoppers. Thereby tapping into a potential growth opportunity in the sector.
Reliance expands e-commerce presence with Ajio Street
Reliance’s push into the e-commerce sector comes when the sector is undergoing significant transformation in India. The increasing adoption of smartphones and the availability of low-cost data plans have also contributed to the growth of the sector. It has accelerated the shift to online shopping, with consumers preferring the convenience and safety of online shopping. These factors, combined with the rising disposable income of consumers, have created a fertile ground for e-commerce players to tap into.
The launch of Ajio Street is expected to provide a boost to Reliance’s e-commerce business. The business has been growing steadily over the years. The conglomerate has been aggressively expanding its digital and new commerce businesses. It focuses on leveraging technology and innovation to cater to the evolving needs of consumers. The launch of Tira, a dedicated platform for the beauty e-commerce category, and Ajio Street, a marketplace model for low-priced, longtail fashion items, are examples of this strategy.
However, the e-commerce sector in India is highly competitive, with several players vying for market share. Apart from the established players such as Flipkart, Amazon, and Snapdeal, there are also several new entrants such as JioMart, the grocery delivery platform by Reliance, and Dunzo, the hyperlocal delivery startup. These players are leveraging technology and innovation to differentiate themselves and provide a unique value proposition to consumers. As such, Reliance will need to continue to innovate and differentiate itself to stay ahead of the competition. It will have to tap into the potential growth opportunities in the sector.
