Facebook has joined forces with a new partner in India as they have made major financial investment in Jio Platforms Limited, part of Reliance Industries Limited. With the investment of $5.7 billion, or INR 43,574 crore, Facebook is now the largest minority shareholder in India’s Jio Platforms Limited. But why exactly are Facebook and Reliance teaming up in India. In order to understand the business strategy, we need to first look at the current market situation in India.
India’s Jio Data Revolution
India is in the middle of major digital transformation which is also known as the Jio data revolution of 2017. Reliance Jio, India’s largest telecom firm led by India’s richest man Mukesh Ambani, has been a key enabler of India’s data revolution with dirt cheap high-speed data and free voice calls. With Jio, users went from data allowance of 1GB per month to 30GB per month (1GB/day) for the same cost of approximately Rupee ₹250 ($3.5) per month. As a result, Reliance Jio has spurred dramatic transformation in India by fueling the creation of innovative new enterprises and bringing more than 560 million people online in less than five years. According to Report by Kleiner Perkins, India’s monthly wireless data usage rose from 200 million GB a month in June 2016, to 1.3 billion GB a month in March 2017 all thanks to Jio. As a result, India surged ahead with nearly 5 billion app installs compared to 3 billion in U.S.A during the last quarter of 2019.
What does Facebook have to offer
India is a special place for Facebook as it is home to one of the largest communities around the world for Facebook and Whatsapp. Over the past few years, Facebook, Whatsapp, and Instagram have become household names in India. WhatsApp, in particular, has entered Indians’ daily vocabulary in 23 different official languages. WhatsApp is more than just an application, it has become a mean to bring together families, friends, businesses, information-seekers and providers. India has more than 60 Million small businesses and entrepreneurs that need reliable digital tools to find and communicate with customers in order to grow the business. Facebook thinks they can help with this by partnering with Reliance Jio, the major player in India’s digital transformation. Facebook is also committing to work together on some critical projects that will bring opportunities for commerce in India.
Reliance and Facebook are hoping that Jio’s digital connectivity platform and WhatsApp’s intimate relationship will offer innovative new solutions to the Indian people. Reliance plans to use JioMart, Jio’s new commerce platform, and WhatsApp to empower nearly 30 million (or 3 crore) small grocery (Kirana) stores to digitally transact with every customer in their neighborhood. This means that users will be able to order and get delivery of day-to-day items from nearby local shops. At the same time, small grocery shops can grow their business and create new employment opportunities using digital technologies. In the days to come, Facebook and Jio hope to extend this recipe to serve other key Indian stakeholders. In addition to small grocery stores, Reliance hopes to reach farmers, small/big enterprises, students/teachers, and healthcare providers as well.
Proven business model from China
Facebook and Reliance Jio are clearly trying to replicate the growth observed in China’s e-commerce market. With almost 650 million online shoppers in China, WeChat Pay has become a giant payment system thanks to the popularity of WeChat messenger. The one billion user base of WeChat is the success factor behind the payment system’s popularity and growth in China, as all one billion users get WeChat Pay by default. It seems like Facebook is trying to do the same in India by utilizing the user base of more than 400 million WhatsApp users in India. It makes perfect sense that Facebook is trying to use a payment platform to get a return on the steep price of $19 billion paid to acquire WhatsApp back in February 2014.
Source: Kleiner Perkins Report, themindstudios, Facebook
I am officially a tech addict and enjoy providing my views on matters related to this industry. I am always interested in trying out new tech gadgets and I have owned multiple smartphones including the legendary HTC One, SGS2, Nexus 4, iPhone 4, 5S, 6S, XR, Note 9. You can ask me any tech related questions in the comment section or on twitter @hookedNav