Digital Friday >>> Gloomy outlook in the Ambani valley
Last year, Google and Facebook collectively invested a staggering $10 billion on Mukesh Ambani, the man behind India's conglomerate Reliance, in hopes to bring millions of Indian's to the online sphere.
The investments will also raise the stakes and margins in ensuring that these companies have a strong footing in the world's fastest growing internet market. Ambani's partnership with Facebook and Google comes into play as he seeks to use Facebook's instant messaging service, Whatsapp to connect small businesses to JioMart, his e-commerce service. Meanwhile, the collaboration with Google aims to create a more affordable 5G smartphone.
However, Jio's plans appear to be facing strong headwinds amidst the pandemic and India's impeding economic slump.
Selling smartphones in India has always been a difficult task given that the average citizen earns around $2000 annually, according to data from the World Bank. Given this, many smartphone brands have always struggled to make their sales including Apple and Samsung.
Jio, although relatively new to the smartphone game, has had to bear much of the weight amidst a shortage of phone parts and rising prices. Delays in the smartphone rollout means that Google would lose its opportunity to capture India's internet user base.
A Jio spokesperson indicated that the pandemic could impact the timeline for the rollout, especially during a period in which manufacturing them is becoming more and more costly,
Both Jio and Facebook have more than 400 million users each in India, and the partnership between them is in part an effort to unseat Amazon and Walmart who are currently at the top of India's retail market.
Despite JioMart's growth, its direct-to-consumer service has been slow in picking up local retailers. Meanwhile Whatsapp is facing struggles of its own, having sued the government over newly established rules that would require the messaging service to break its encryption.
In addition, Amazon is challenging Reliance's recent aquisition of rival retailer Future Group. The court battle will most likely slow JioMart's growth prospects, suggesting that this large-scale investment by two of Silicon Valley's biggest companies, may prove futile for the Ambani billionaire.
Published 2nd July 2021 | 4:01 pm