As Facebook, the world’s largest social media company, invests $5.7 billion for a 9.99 per cent stake in Jio Platforms, the deal is also seen as a powerful alliance to take on formidable players in e-commerce and payments space such as Amazon, Flip-kart and Google.
The partnership is expected to help Mr.Ambani’s Reliance e-commerce venture JioMart to take on players such as Flipkart and Amazon in the Indian online commerce market, backed by the Facebook forum. According to industry insiders and analysts, the business opportunities opportunities for online commerce in the country is expected to touch $200 billion by 2028 from $30 billion in 2018.
Out of the investment made by Facebook, about Rs 15,000 crore would remain with Jio, and this is a preposterous amount which JioMart can use for building its (e-commerce) network. :If they are able to execute this properly on the ground. They are going to create massive problems for the likes of Flipkart & Amazon, due to the kind of scale that they can achieve,” said Satish Meena, a senior forecast analyst at Foreseer Research.
Facebook wants to use WhatsApp for e-commerce opportunities with small businesses. Amazon, Flipkart can’t compete with Jio-Facebook because they don’t have an edge on data. While in the short term, there may not be much market impact as due to Covid-19 nothing significant shall happen in the next 3-6 months, however in the long term the alliance will not only counter competitors like Amazon and Flipkart, but will rupture the entire e-commerce ecosystem in the country,” said Waris.
Waris said, while Facebook would be piggybacking on Jio providing internet access in India, this partnership threatens the very concept of net neutrality due to Jio‘s edge on data. It could lead to even more deep anti-competition tactics like deep discounting.
India is among the largest communities globally for the company, with close to 328 million users. Instagram has millions of accounts in India, and WhatsApp announced in 2019 that it had 400 million users in the country, making it the biggest market outside the US. According to a report by Credit Suisse, the partnerships between Jio, and JioMart, which is a new commerce initiative by Reliance Retail could see the WhatsApp messenger service serve as a multiplying enabler.
FB’s entry into India has seen the firm do things differently from other markets. The model flipped here because users first accessed Facebook on a phone instead of a desktop, thus making the mobile the cornerstone of their strategy.
Thakur also said that RIL’s plan to take Reliance Jio Infocomm public remains on the table.
With oil prices plunging, “the risk that the deal (RIL-Aramco) will not go (through) has increased although we now value downstream at $55 billion gross which is a 20% discount to Aramco valuation,” according to brokerage Bernstein. With oil prices plunging, “the risk that the deal (RIL-Aramco) will not go (through) has increased although we now value downstream at $55 billion gross which is a 20% discount to Aramco valuation,” according to brokerage Bernstein.
