The FB-Reliance Jio deal: What's in it for you, for kiranas and for India

The FaceBook-Reliance Jio deal: What's in it for you, for Kiranas and for India

 

US social media giant Facebook on April 22 announced that it will acquire a 9.99% stake in Jio Platforms, a Reliance Industries unit, for Rs 43,574 crore, valuing it at Rs 4.62 lakh crore.

’’This is a win-win deal for both the conglomerates as it will help Mark Zuckerberg’s Facebook gain a strong foothold in India while allowing Mukesh Ambani’s RIL reduce its debt.

No sooner had the announcement been made than the share market started looking up led by Reliance Industries stocks jumping 10%.

‘’The deal has generated interest among all stakeholders, including ‘kirana store’ owners (small grocers) and consumers who are keen on knowing what this deal means.

’Here’s a 360-degree view of what is in it for each stake holder:

 Key features of the Facebook-Reliance Jio deal

This is the largest investment for a minority stake by a technology company anywhere in the world.

Facebook will become Reliance Jio's largest minority shareholder.

It is the largest Foreign Direct Investment in the technology sector in India.

The investment values Jio Platforms amongst the top 5 listed companies in India by market capitalisation.

Reliance Retail Limited and WhatsApp have entered into a commercial partnership agreement to expand its business on the JioMart platform using WhatsApp by supporting small businesses.

FB and Reliance Retail will work together to enable consumers to access the nearest Kirana shops who can provide products and services to their homes by transacting with JioMart using WhatsApp.

 What it means for Reliance:

Reliance Industries’s much anticipated ‘new commerce’ move, Jio Mart, may finally be set in motion.

The deal will help reduce RIL’s debt burden which surged due to the breakneck expansion of Jio and other businesses.

This deal will add value to the conglomerate's technology/telecom arm that plans on being separately listed in a few years.

This deal is now the main feature of the ambitions of India’s biggest private company to cut net debt to zero by March 2021.

The stake sale in Jio Platforms is to expand RIL's latest venture, JioMart. In its statement, the company said that its goal with the Facebook investment is to help expand opportunities for ‘businesses of all sizes’, it said.

 What it means for kirana shop owners

Taking advantage of Facebook's existing reach of WhatsApp in India, kirana shop partners of JioMart will be able to serve more customers and increase profitability, in turn helping Reliance Retail.

At the same time, small kiranas can grow their businesses and create new employment opportunities using digital technology.

WhatsApp will empower nearly 3 crore small Indian kirana shops to digitally transact with every customer in their neighbourhood.

As part of the deal, local vendors and small kirana businesses will be able to register on JioMart, the online groceries delivery platform, and receive seamless orders through WhatsApp.

 What it means for you, the customer

Although online shopping and shopping from big departmental stores may have picked up pace in recent years, these activities are mostly reserved for the weekends or when you have to pick up larger items. In middle class Indian homes, habits die hard and also convenience comes first.

People from most Indian households’ (including urban and rural) make a dash to the kirana store at the end of the lane or at the center of the locality for their daily essentials.

WhatsApp is ubiquitously the preferred messaging and communication service across different segments of internet users, therefore expanding the scope of business for kirana stores that so far largely survived on offline, physical orders.

As part of the deal, local vendors and small kirana businesses will be able to register on JioMart, the online groceries delivery platform, and receive seamless orders through WhatsApp.

With the Jio Mart-WhatsApp deal, customers will be able to easily place orders for the smallest thing they want to purchase from a neighbourhood kirana store by placing the order online and receiving the delivery almost immediately and seamlessly from the comfort of their homes.

This advantage is not available on e-commerce websites where there is a waiting period before delivery.

The option also helps you avoid miscommunication while placing orders on the phone.

Also, this give you the opportunity to continue supporting your favourite kirana store to sustain and grow business,.

 What it means for India

This partnership might prove to be a catalyst to make India one of the world’s leading digital societies.

FB and Reliance have together committed to accelerate India’s digital transformation to empower, enable and enrich people.

Reliance Industries Limited chairman Mukesh Ambani has states that ‘at the core of the partnership is the commitment that Mark Zuckerberg and I share for the all-around digital transformation of India and for serving all Indians.’

He also said ‘The combined power of Jio's world-class digital connectivity platform and Facebook's intimate relationship with the Indian people will offer innovative new solutions to each one of you in the very near future.’

This deal is in line with Prime Minster Narendra Modi’s ambitious goals in his digital India mission. 'Ease of living' for all Indians, especially for the common Indians, and 'Ease of Doing Business' for all entrepreneurs, especially for small entrepreneurs could be a dream come true.

India is home to the largest communities on Facebook and WhatsApp, and a lot of talented entrepreneurs for whom business opportunities might open up.

India has more than 60 million small businesses and millions of people rely on them for jobs. With communities around the world in lockdown, many of these entrepreneurs need digital tools they can rely on to find and communicate with customers and grow their businesses.

In the words of Anand Mahindra this deal ‘is a strong signal of India's economic importance.’ He tweeted "Jio's deal with Facebook is good not just for the two of them. Coming as it does during the virus-crisis, it is a strong signal of India's economic importance post the crisis. It strengthens hypotheses that the world will pivot to India as a new growth epicentre. Bravo Mukesh!"

 What it means for Facebook

With Jio's 388 million customers, Facebook gets access to a wider audience.

The social media giant gets a firm foothold in a fast-growing massive market

For Facebook, India has in recent years emerged as a critical market. The company has more users in India than any other country. Its WhatsApp chat service, which is about to launch a payments service, has attracted 340 million users.

Despite the rapid growth of its social network and WhatsApp, the tech giant struggled with its Free Basics plan to provide free internet services after a ban by Trai, the telecom regulator.

With this deal Facebook has now has added an ally in its kitty present in sectors ranging from telecom to ecommerce to home internet.

Facebook is committing to work together on some major projects that will open up commerce opportunities for people across India and the tech giant stands.

 

Happy Investing

Source: Yahoofinance.com