RIL plans to set up Reliance Jio Hubs in smaller towns

New Delhi: India’s richest man Mukesh Ambani plans to build Reliance Jio Hubs, a one-stop shop for all consumer items sold by Reliance Industries Ltd and its units ranging from electronics to groceries, to provide people living in small towns their first mall-like shopping experience. The aim is to leverage the strengths of units Reliance Retail Ltd’s physical stores and Reliance Jio Infocomm Ltd’s digital infrastructure to boost sales in smaller towns, which have largely been untouched by modern retail and online shopping.

Reliance Jio Hubs is the biggest focus area for the company after Jio GigaFiber broadband services, a person familiar with the development said, requesting anonymity. The Jio Hubs project is in line with Ambani’s vision to bring together telecom, retail and e-commerce to become a technology platform.

“It is the chairman’s (Ambani’s) pet project. The company has realized that it has to reach small towns to get big volumes,” the person said.

At Reliance Industries’ annual general meeting on 5 July, Ambani said: “We see our biggest growth opportunity in creating a hybrid, online-to-offline new commerce platform.”

“Small towns need assisted e-commerce and the comfort of a physical space where after-sales service is also available,” said a retail sector analyst, requesting anonymity.

“Reliance Jio Hubs could showcase what is available and act like experience centres. Most importantly, these hubs could also hold inventory and act as warehouses as it satisfies the 100% India owned requirement under the draft e-commerce policy.”

Under the draft e-commerce policy floated by the government last month, only Indian-owned firms will be allowed to hold inventory.

“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 finalized within a month,” the person cited above said.

The plan to reach local markets, know local merchants and local customers assumes significance given a large chunk of Indian population still shops offline.

The online retail market in India has more than tripled since 2015, but it is only expected to contribute to 2.9% of the total retail sales in 2018, a June report by researcher eMarketer said.

Reliance already has a formidable physical presence in the country with 7,500 stores across 4,400 cities under its subsidiary Reliance Retail. This arm sells grocery, electronics, jewellery and clothes under Reliance Fresh, Reliance Digital, Reliance Jewels, Reliance Trends, among other brands.

It also has close to 5,000 Jio Points, which are small 500 sq. ft offices in semi-urban and rural pockets, offering after-sales services and customer assistance.

Jio Hubs, on the other hand, would be spread across a much larger area and would capitalize on brand Jio which already enjoys a mass-market appeal and good market share in rural markets given its 4G coverage.

“Jio is doing especially well in the rural markets (category B and C circles) because incumbents lag Jio in 4G coverage and also due to the success of JioPhone which has sold 25 million devices by June 2018,” a 27 August research note by BNP Paribas said.

RIL, with a wireless subscriber base of over 215 million, is also gearing up to commercially roll out Jio GigaFiber through which it aims to offer high-speed home broadband to 50 million homes.

“We forecast Jio’s subscriber base to rise above 400 million by March 2020. This equates to almost 45% of India’s population in the age of 14-80 years. Under ‘Reliance’s grand plan’, these may not be seen as mere telecom subscribers but as ready customers to get revenue/profit from other sources like ads, retail sales, services and content,” a 6 September report by CLSA said.

An email query sent to Reliance Jio was unanswered till press time.