Facebook’s investment in Reliance Industries not surprising: Brett Biggs, CFO, Walmart

Walmart-controlled Flipkart and Amazon jointly hold 80% of the country’s e-commerce sector at present.

India is a competitive market and Facebook’s investment in Reliance Industries is not ‘surprising’, said Brett Biggs, CFO at Walmart.

“Reliance has been a competitor for years. It’s (India) been competitive, Reliance, Amazon. So, when you have 1.3 billion people, it’s going to attract a lot of investment, a lot of the reasons why we went there,” Biggs said at a conference. “So it’s not surprising,” Biggs added.

US tech major Facebook last month announced an investment of $5.7 billion (Rs 43,574 crore) to buy a 9.99% stake in Jio Platforms. This is Facebook’s biggest stake buy since its 2014 acquisition of WhatsApp for about $19 billion.

The two firms will collaborate on the e-commerce front to digitise the country’s over 60 million small and medium businesses, and 30 million neighbourhood kirana stores. The basic idea is that Jio’s e-commerce app Jio Mart will get integrated with FB’s messenger platform, WhatsApp to bring on-board the neighbourhood kirana stores on a digital platform.

WhatsApp’s 400 million subscribers in India and its soon-to-be-launched payments app could give JioMart the lever it needs to be able to link millions of small merchants and kiranas with customers. JioMart is already delivering in more than 200 cities.

Walmart-controlled Flipkart and Amazon jointly hold 80% of the country’s e-commerce sector at present. During the initial phase of the Covid-19 induced lockdown, online firms had struggled to deliver essentials and customers turned to kiranas for stocking up on daily needs. Amazon and Flipkart do not have a strong presence in grocery and the market is led by BigBasket and Grofers.

Soon after the announcement of the deal, Amazon India launched the ‘Local shops on Amazon’ programme to enable customers discover products from local shops in the city while helping shopkeepers supplement footfalls with a digital presence.

“Flipkart for us is a really long-term investment,” Biggs said. To grab a pie of India’s retail sector, Walmart acquired a controlling stake in Flipkart in 2018 in a hefty $16 billion deal. Before the investment, Walmart had been present in the country’s wholesale cash-and-carry segment.