Mukesh Ambani faces challenger, shows Kotak’s Gurugram investigation

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Udaan has more partners

Five-year-old Udaan has the advantage of being the first to arrive and is proving to be a “strong challenger” for the development of JioMart’s business-to-business network, according to the report.

Almost 45% of retailers surveyed have Udaan as a distribution partner, compared to around 33% for JioMart, according to the Kotak survey.

JioMart, launched in May last year, engages with small retailers in two ways:

The two services are bundled. To get orders from JioMart users, a retailer must purchase inventory on the platform.

At Gurugram, the overall margin offered by JioMart, Udaan and other distributors is similar, although JioMart appears to offer better promotional programs and credit terms, according to the report. About 55% indicated that traditional distributors offer “no discounts” on products.

Retailers, in general, earn a profit margin of 7-15% depending on the product.

JioMart retailers receive an additional average delivery charge of Rs 27 per order. This gives it an advantage as most retailers deal with more than 10 distributors. And food and groceries account for 71% of sales in Kiranas.

The challenges of JioMart

Kotak analysts said JioMart has improved its service levels, but there is enough room to improve.

Only 44% of Gurugram partners were satisfied with JioMart as a distributor. This, according to the brokerage, is well below the 98%, 100% and 83% satisfaction levels in Mumbai, Bangalore and Ahmedabad, respectively. JioMart has a 20-25% market share in distribution in Bangalore, Mumbai and Ahmedabad.

Kotak conducted surveys in Mumbai in December 2020, Bengaluru in February and Ahmedabad in May.

JioMart has three lakh partner stores in 200 cities. It aims to integrate a crore of merchant partners over the next three years.

Still, around 59% of Gurugram retailers said the merger with JioMart did not benefit their business.

JioMart, according to the survey, promised a mix of discounts and offers, fast delivery and a wide range of products, as well as better quality products. But the slow delivery and inconsistency with product and brand availability were its main pain points.

Another major obstacle is infrequent engagement.

According to the survey, 44% of retailers said JioMart representatives visit once every two weeks. Some have even said that the frequency is once a month when salespeople from other distributors come to the stores every week.

Many retailers were unaware of JioMart’s B2B distribution services. Non-partner retailers cited as reasons “don’t know how to tie up” and “sales reps don’t visit and take orders”.

Retailers prefer Udaan because of cheaper prices, on-time and door-to-door delivery, and online ordering.

Udaan and Reliance Industries Ltd., the parent company of the retail company, have yet to respond to questions emailed to BloombergQuint.


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