Facebook and Jio — A ray of hope or a monopoly too real to ignore
During this Covid-19 lockdown, Bruhat Bengaluru Mahanagara Palike came up with an idea to deliver groceries to residents by partnering with the likes of Dunzo, BigBasket, and onboarding local merchants. They streamlined the whole process of grocery delivery with the help of Whatsapp. Share your order and location on the helpline number. The merchants receive the request and dispatch your order for delivery. This concept is not new to Tier 2, and Tier 3 cities as a large number of people have been conversing with their nearby Kirana stores to procure daily usable items. The whole transition hints towards an essential aspect — the growth of conversational business in India with its prime asset being Whatsapp. With 80% active of the 493 million users, it has become an asset that can help companies build their businesses on it. Startups like Meesho, Citymall are great examples of the integration of business models around Whatsapp with the aim to integrate SMEs in the country.
The above discussion brings us to the most talked deal amidst a global pandemic — Facebook Inc. acquiring a stake in Reliance Jio Platforms. Statistically, Facebook will pay $5.7 B or ₹43,574 crores for a 9.9% stake in Jio platforms, valuing Jio Platforms at $65.95 B. For a company which received an investment of 1.8 Lakh crores from RIL, this deal is too exciting as it is getting ₹43,574 crores on an investment of ₹18,000 crores.
“In the very near future, JioMart and WhatsApp will empower nearly three crores small Indian Kirana shops to transact with every customer in their neighbourhood digitally. This means all of you can order and get faster delivery of day-to-day items from nearby local shops. At the same time, small kiranas can grow their businesses and create new employment opportunities,” Ambani said in a video on Wednesday.
India — Facebook long unfulfilled dream
Facebook’s aspirations to enter the world’s largest untapped digital market is known to all. Five years ago, Facebook launched ‘Free Basics,’ aimed at providing free access to sites like Bing, Wikipedia, citing them as essential services. What’s important to note is that significant tech competitors Amazon, Google were excluded in this service. Alongside this, the service violates the internet neutrality laws of India and hence was brought down by TRAI.
Since then, Facebook has invested in fast-growing Indian startups like Meesho. This has been a visible signal of its strategy — it wants to target the SMEs of India. By entering a market worth $5.4 Trillion, Facebook wants to pose a severe threat to the likes of Flipkart and Amazon.
And what better partner could Facebook find than Reliance Industries Limited — owner of India’s largest retail chain. With the introduction of Jio, Reliance aimed to become the market leader in digital by acquiring large customers through extremely minimal tariff rates and unlike other telecom players has tried to build an entertainment ecosystem by introducing services like JioMoney, JioCinema, and JioChat.
Though it has seen great success in acquiring customers, what seems to hurt Ambani is that despite such large expansion, Jio is largely regarded as a telecom service provider and has not been able to monetize its 388 million Jio users in a way he had predicted and falling back in the competition to tech giants like Netflix, Amazon or Paytm. This time, Ambani’s bid on SMEs is an effort to bring those customers into the mainstream.
SMEs — The Hot Topic
Since its inception, online marketplaces, in many ways have disrupted the existing markets and changed consumer patterns. What’s interesting to note is even after such a tremendous impact, the market share of these companies in India is somewhere around 3% and hasn’t crossed 5% for any specific commodity. This reveals the power of the offline retail market in India, which has long operated in the undigitized sector. Introducing something like JioMart can help Ambani penetrate the existing markets without disruption, and he seems to be capitalising on the existing Kirana market competition, which would help him provide better customer satisfaction in the longer run.
Considering Reliance’s proximity with the government, Whatsapp Pay is soon to be released in India. This changes the industry of digital payments as Whatsapp, with its unique interface, has the potential to lead the way for a population relatively new to the concept of digital payments.
Data — Probably you are (Z)ucked
What separates this partnership from other giants of the industry is the edge over data. Suppose WhatsApp, through its commercial agreement with JioMart, ends up providing more profound data to Facebook. That would mean more intense and localised insight into the consumption patterns of Indian customers. As a result of this, Facebook can provide more specific advertisements to every customer. On the other hand, social media platforms of Facebook can quickly provide insights about behavioural patterns of people, helping JioMart target customers in a more individualistic manner. Both organisations engage themselves in a loop whose benefits are too significant to be ignored.
While these are mere speculations as the data-sharing agreements are yet to be made public. Considering the amount of data involved, the deal needs to be scrutinised in terms of data to maintain a healthy competition for other firms in the market and maintain privacy at a customer level.
One thing which has been made sure through this deal is that retail businesses would drive the post-COVID-19 market in India. India is now turning into a battlefield for tech giants around the world, and this deal is the beginning. These are also exciting times for entrepreneurs and investors in the B2B sector. These companies are creating monopolies that are too real to ignore, and if startups show exciting results in these times, they can turn into a good acquisition package. While the resulting impact of this deal lies in the hands of the future, these monopolies can give the Indian startup ecosystem it has lacked for long — successful exits.
Written By- Sanskar Pareek
References:
3.https://the-ken.com/story/whatsapp-it-to-me-facebooks-push-to-use-chat-for-commerce/
6.https://www.nytimes.com/2020/04/21/technology/facebook-jio-india.html
7.https://qz.com/india/1842767/reliance-jio-and-facebook-are-sitting-on-a-goldmine-of-data/
