Reliance Vs Amazon Vs Tata: The Super App Battle Starts With India’s Farmers

Even as the protests against the new farm laws continue, private companies are already tinkering with their business models to tap into a domestic market of 1.3 billion and an industry that employs more than 500 million people directly or indirectly.

Post-announcement of the farm laws, many private players voiced their interest to collaborate with farmers across the country. ITC was already planning to create export-oriented fruit and vegetable clusters across the country through contract farming.

Mukesh Ambani, whose name has been dragged into the protests by vested political interests, also voiced his intention to work with farmers in India. Around the launch of Jiomart, Ambani, emphasizing the digital transformation of India, stated that innovative digital solutions would help 30 million small merchants, 60 million small and medium enterprises, and 120 million farmers.

In January, in Karnataka, close to 1,100 farmers signed an agreement to sell their paddy directly to Reliance Retail. The agreed price for the paddy was above the minimum support price (MSP). The agreement was signed by the Karnataka Agricultural Produce Marketing Committee (KAPMC) Act of 2020, allowing farmers to trade with any player outside the designated APMC yards, and above the MSP.

It was reported last year that Reliance was also working on setting up a farm-to-fork supply chain through its app JioKrishi. The app is supposed to help farmers with the ideal time to sow, irrigate and fertilise their crops. JioKrishi was instrumental to JioMart in many ways, given that Reliance wanted to create a delivery mechanism where it does not take more than 12 hours for the produce to be delivered to the stores from the farms and subsequently to the consumers.

However, with the creation of JioMart, Reliance wanted to embark on the journey of creating India’s first super app. Similar attempts were made previously by Flipkart, PhonePe, and even Paytm with some success, but Reliance’s JioMart, in collaboration with Jio’s telecom offering, aims to create India’s first super app.

A super app can be imagined as an all-in-one app. Think of Uber, BigBasket, Zomato, Hotstar, WhatsApp, PhonePe, Facebook, and Instagram — all rolled into one. There is no upper limit on the number or kind of services included within a super app though.

Previously, Justdial and Paytm tried to embark on a similar model but they couldn’t make much headway, given the lack of scale and subscriber numbers.

At 340 million active subscribers or 25 per cent of India’s population, to begin with, Jio and Facebook will be in a far better position to create India’s first super app. Throw in the number of users from Facebook, Google and WhatsApp, all investors in Reliance Jio, and the subscriber base only grows bigger.

Already, Jio has ventured into many other digital services. These include Jio GigaFiber, Jio Cinema, Jio Music, Jio TV, Jio HealthHub, Jio News, Reliance Digital, Jio Engage, Jio Cloud and Jio Switch. Apart from the services already provided by Jio, in the future, the services could extend to education, logistics, food, farming, fashion, dating, professional networking, and so forth.

While a super app can host scores of services including banking, digital payments, music and movie streaming, OTT platforms, point of sale finance products, ticketing services, interactive gaming, news, and everything under the sun, its success depends entirely on the performance of its e-commerce offering.

Therefore, for Jio, JioMart continues to remain an essential part of the super app dream, for no super app battle can be won without having a thriving e-commerce business, at the centre of which are the fast-moving consumer goods (FMCG) and the farmers of India.

This is where JioMart enters into direct competition with BigBasket. It was reported that during the lockdown, Reliance registered more than 400,000 orders each day. Given their partnership with small neighbourhood retail stores (kirana shops), Reliance could cater to these orders while being a new platform with minimal marketing.

BigBasket, on the other hand, had close to 300,000 orders each day. Amazon and Grofers had around 100,000 orders each, per day. What aids JioMart is its staggering presence across India. Unlike BigBasket and Grofers, which are present only in 25-30 cities, JioMart is already present in more than 200 cities.

BigBasket has also been actively working with farmers. Through their farmer connect programme, launched in 2016, the company has simplified the supply chain in order to ensure the quality of the fresh produce. This has helped farmers raise their incomes by 10-15 per cent.

The company, by 2019, had 30 collection centres across the country. Today, it sources 80 per cent of the fruits and vegetables directly from the farmers, thus taking the middleman out of the equation.

BigBasket, by virtue of its business model and scale, was not seen as a direct competitor to Reliance, but now, it has become a part of a much bigger universe — the Tata super app.

The Tata Group and BigBasket have agreed on a $1.2 billion deal giving Tata a 60-63 per cent stake in the online grocer. The Tata deal will usher the exit of China’s Alibaba and private equity firm Abraaj Group from BigBasket, leaving the reins with the conglomerate.

Already, Tata is planning to acquire a 55 per cent stake in online pharmacy 1mg. Interestingly, this acquisition plan comes right after Reliance acquired a majority stake in Netmeds, another online pharmacy, and after Amazon’s announcement of Amazon Pharmacy.

The Tata super app plan goes beyond e-commerce and pharmacy and will have services that include consumer durables, financial products and telecom. The shopping app Tata CLiQ, grocery e-store StarQuik, and online electronics platform Croma could also be integrated within the app. Tata already has a prominent online presence with Tanishq jewellery outlets, Titan, Star Bazaar retail stores, Taj Hotels, and Westside — a clothing brand.

However, for Tata’s super app ambitions, its BigBasket acquisition would have to turn things around.

Amazon is also not far behind in reaching out to the farmers of India. Already, the global e-commerce giant offers an array of online products including the world’s biggest e-commerce store, streaming service, grocery services, digital payments (Amazon Pay), ticketing services, and point-of-sale finance products.

In 2019, Amazon was already running a pilot project in Pune to source fresh produce directly from the farmers under its farm-to-fork initiative. The idea was then to sell the produce through Amazon Pantry and Amazon Fresh.

In 2017, Amazon made a $500 million investment in the food and grocery segment in India after approval from the government.

Amazon has also been working overtime to onboard kirana stores to strengthen its e-commerce segment. In April 2020, Amazon India announced an investment of $1.3 billion to onboard 5,000 local kirana stores across 100 cities.

Walmart, via Flipkart, has been investing heavily in the same segment and would be next in the super app queue. In September 2020, the company had an onboarding programme to incorporate 50,000 kirana stores to start deliveries in 850 cities.

In the end, JioMart, BigBasket, and Amazon Pantry, and Amazon Fresh are critical to the super app ambitions for Reliance, Tata and Amazon.

Given grocery and fresh food sales constitute 40 per cent of the e-commerce sales online, the entry of big players like Reliance, Tata and Amazon was only a matter of time. The smaller players may have had the innovation and the first mover’s advantage, but the scaling could have only happened via the conglomerates.

For the farmers outside the MSP purview, which is 94 per cent of India’s farmers, the super app battle between Reliance, Tata and Amazon comes with countless opportunities, from better pricing to investments in technology.

Once the protests around the new farm laws settle, the three-way super app battle, already underway, will only be intensified.

JioMart has a headstart by virtue of its established network of retail stores, partnership with Facebook and WhatsApp, and a significant customer base from Jio telecom. Thus, Tata, Reliance, and even Walmart would have to play the catchup game for at stake will be India’s online grocery business, estimated to be worth $800 billion by 2024.

While there will be only one winner of the three conglomerates, the farmers and consumers will win by virtue of better quality, pricing and products.

It’s a super deal.