10 June 2020

Chat commerce gets a massive boost with facebook investment in Jio platform

10 June 2020
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3 minutes

By guest author Nirmal Nair, CMO at Clickatell

On April 21, Facebook announced a $5.7 billion investment in Jio Platforms, owned by Reliance Industries, for a 9.9% equity stake. The following week, Jio Platforms rolled out a pilot in select cities in India to enable commerce for small neighborhood businesses based on order placements using WhatsApp. Jio is the largest telecommunications company in India with 388 million subscribers and a 35% market share. Reaching this milestone in 3.5 years upended the incumbents through aggressive marketing, newer technology (4G, LTE), and sheer timing.

India is the largest market for WhatsApp, with over 400 million users as of July 2019. The companies hope to use an e-commerce platform, JioMart, and WhatsApp to connect small businesses with online retail.

This is a significant move towards bringing digital commerce to a huge market and designed with local market conditions in mind. What makes the strategy interesting is how it’s leapfrogging the traditional online commerce models like Amazon and Walmart by combining the simplicity of chat (WhatsApp) and the supply chain convenience of millions of small stores present across India. This is likely the onset of the largest deployment of chat commerce outside of China where WeChat dominates.

Mukesh Ambani, CEO of Reliance Industries, recently said in an article in TechCrunch, “Jio’s digital new commerce platform and WhatsApp will empower nearly 30 million small Indian Kirana (corner) shops to digitally transact with every customer in their neighborhood.”

An online-to-offline ordering system on WhatsApp is a terrific idea and the timing could not be better. With the strategic move of including small businesses and sidestepping the lack of supply chain infrastructure, the JioMart and WhatsApp combination provides an ideal marketplace for Indian conditions, including retail commerce on a social chat platform that everyone loves and favorable unit economics without massive warehouse and distribution infrastructure.

Local stores are always available. Delivery is nearly free and instantaneous (free Prime!). And, WhatsApp is practically on every smartphone in India. If JioMart helps the local stores with inventory and payments on WhatsApp for ordering, notifications, and delivery, the resulting system will be a game-changer.

Wylie Fernyhough, an analyst with PitchBook, said in a CNN report that investors see the potential “for the Indian version of WeChat and how many hundreds of billions of dollars that could be worth one day.” He added, “Being able to kind of get in on the ground floor of that is something that is really interesting to a lot of people.” It’s true. Since this Facebook investment, Jio Platforms has raked in over $10 billion with four more investors from the US.

Other developing markets should take note. Africa is the next biggest market with one billion people and similar infrastructural challenges. Telecommunications companies like MTN dominate the African landscape and large banks have been successful with private marketplaces in Nigeria and South Africa. WhatsApp is a very popular channel in all these markets. What is needed is the platform infrastructure to rapidly roll out the future of digital commerce.

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About Clickatell

Todays’ consumers spend more time on chat like text, Instagram, Facebook Messenger, and WhatsApp than apps, and they expect a high degree of convenience in the way brands serve them. Clickatell makes it possible for brands and consumers to engage and transact via mobile chat and digital channels with industry-leading communications commerce platforms and solutions. With offices in San Francisco, Toronto, Cape Town, and Lagos, Clickatell serves more than 15,000 global brands, ranging from Fortune 500 organizations to well-known consumer brands and small businesses in over 220 countries worldwide.

Read more about Clickatell

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