How Facebook is logging into the Reliance Jio ecosystem

BENGALURU/MUMBAI: Among the many things left unsaid in the several statements surrounding the $5.7 billion investment by Facebook in Reliance Industries Ltd.-owned Jio Platforms on Wednesday, was that the social media giant’s messaging service WhatsApp could now be transitioning beyond an app into a “platform”, with commerce and transactions (payments) becoming integral to its strategy, besides communication.

A video by Facebook CEO Mark Zuckerberg offered a clue of sorts. “India is a special place for us. We are also committing to work together on some critical projects that we think are going to open up a lot of opportunities for commerce in India,” Zuckerberg said in his post. In a way, Facebook, the company, has logged into the Jio ecosystem.

One of those opportunities Zuckerberg mentioned, impeccably timed for a post-pandemic era, could involve the digitisation of retail. Even beyond the
kirana stores that RIL chairman Mukesh Ambani referenced in his media address on Wednesday, Facebook and WhatsApp have been trying to court small and medium businesses (SMBs) on their respective platforms over the last two years.

Jio too has been onboarding these
kirana stores for the last two years with occasional pilots, without a clear go-to-market plan. But this deal, industry sources say, gives it the necessary impetus.

kirana stores come on to its “JioMart” (business-to-business) ecosystem, the latter would enable its supply chain, while WhatsApp could likely power the (business-to-consumer) payments offering, with a logistics network or the
kirana store ensuring delivery.

JioMart could essentially be a digital storefront which aggregates a mix of Reliance Retail’s distribution centres, its B2B cash and carry business—Reliance Market, the neighbourhood
kirana stores, and other organised retail outlets owned by Reliance.


Beyond the specific contours of the deal and WhatsApp strategy, the Reliance-Facebook deal has ensured the creation of yet another high-powered ecosystem. The deal, as Arpan Sheth, partner at Bain Capital says, has allowed Facebook to “get a foothold into a high-performing and valuable telco in India with a strong leadership position.” He adds, “They also have the ability to jointly create interesting ecosystem plays that take advantage of Facebook’s high daily active users or DAUs and extremely engaged customer base and Jio’s platform assets.”

“It is unlikely that Jio will give away real estate on WhatsApp,” says a fintech professional aware of developments surrounding the deal. “It is likely that WhatsApp will remain an open platform,” he adds. This could underline its platform ambitions—with the unification of Facebook, WhatsApp and Instagram, enabling ease of data flow, with a plug and play model, allowing brands and publishers to reach out to consumers directly, for an “access fee” of sorts.

WhatsApp Pay, which was stuck and rolled out in phases due to regulatory reasons and a court case, could be launched as early as next month or June, government sources tell ET. Once launched, WhatsApp could leverage Jio’s Payments Bank, the person quoted earlier adds, as a sponsor bank to power its UPI-based payments—an @jio handle, for instance, instead of the existing @icici handle, owing to a prior partnership.

Jio, on its part, could leverage or bundle WhatsApp for Business to its retailers, with an end-to-end service, unlike now, where they have to go to via Facebook and other third-party companies like Facebook. “These could effectively be one win each for both sides,” the person adds, before saying, “Given Ambani’s track record with telecom, if Jio can guarantee 10 million WhatsApp for business accounts in the next six months, Zuckerberg will be delighted.”

But in the long run, this could fuel Jio’s fintech ambitions—especially around lending and insurance—which until now have been restricted to point-of-service terminals. Providing financial services, sources say, is also on WhatsApp’s radar from a longer-term point of view, given that it was “doubling down on payments, as a first step.” Another person familiar with these developments says, “Once you enable these
kiranas on to your ecosystem, it is easier to power fintech on top of this.”

A 360-degree view

While all the focus has been on
kirana stores, what goes without saying is the inherent data play in this partnership. WhatsApp, through its commercial agreement with JioMart, could provide deeper, richer data to Facebook.

That would mean, granular insights around consumption patterns akin to “who is consuming what” to “how much is someone spending.”

This, according to people closely involved with internet advertising, would give Facebook an “exact pulse of consumer insights”, which will only funnel its already formidable advertising machine, beyond the top 1000 advertisers on digital. “Facebook has been gaining a lot of traction among SMEs because of how easy it is to advertise there,” the person cited earlier added.

But above all, it could give Jio a chance of monetising its 360-million strong subscriber base, and Facebook and the marketers and publishers on its platform, willing to pay to access Jio’s user base.

“Advertising is the holy grail. Jio is sitting on a goldmine since it hasn’t been able to monetise its users,” says Neil Shah, partner at Counterpoint Research. “Besides, Jio can also integrate Facebook’s ad platform into its products on a revenue share basis,” Shah adds.

All of this hinges on how both sides have agreed to share data. “Facebook may get access to Jio’s data, but the other way could also be true, given the changes in discoverability. They could monetise discovery. How do you do that? You feed the data of apparel you likely saw on Instagram, into Reliance Retail’s inventory, which can inform the customer about its availability, and the transaction can be initiated and completed,” says Arvind Singhal, chairman of Technopak Advisors.

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