At a time when small and deep-pocketed players in India are jostling for space in a rather crowded e-commerce market, the new partnership between Meta’s WhatsApp and Mukesh Ambani-owned Reliance Retail’s JioMart claims to offer its customers a seamless ‘ordering’ experience.
According to experts tracking the sector, the move is expected to benefit both the giants in the industry that is populated by the likes of Amazon, Walmart’s Flipkart and new players such as upstart Zepto, Swiggy’s Instamart, Dunzo Daily and Blinkit.
While the parentship will enable WhatsApp to expand its payment service, for JioMart, it will mean getting access to a platform that is already used by 500 million Indians of all groups and backgrounds.
“Internet businesses in India have usually plateaued in terms of user monetization outside of the urban customer base and a fully integrated shopping experience on WhatsApp, a platform that users are comfortable with and transact frequently on, can open up a very large market opportunity for Jio and a significant monetization mode for WhatsApp,” Samir Bahl, CEO of Investment Banking at Anand Rathi Advisors Limited told DealStreetAsia.
This, however, is not the first time WhatsApp has partnered with a company to expand its operations. It earlier collaborated with social commerce platforms Meesho in India, Mio in Vietnam, Elenas in Colombia and Kitabeli in Indonesia, which involve numerous steps between product discovery and checkout.
Bahl said the WhatsApp/Jio shopping experience has been in the works for some time and that the partnership is expected to be strong. This is primarily because Meta, the parent entity of WhatsApp, invested $5.7 billion in Jio Platforms for a 9.9% stake in April 2020.
To be sure, WhatsApp has not made this mammoth investment in any other company so far.
This model of shopping on WhatsApp, which Isha Ambani, the director of Reliance Retail, explained can simply start by sending a ‘Hi’ to the JioMart smart bot on WhatsApp, seems like a preliminary step in the company’s efforts to become a super app.
WhatsApp seeks to become a to-do-it-all platform for managing everyday life – from shopping to paying rent to transferring money and replicating China’s WeChat.
Two years ago, India banned WeChat and some other Chinese apps in the country, also giving WhatsApp the opportunity to easily fend off the potential competition from the Tencent-owned messaging app, by creating its own WeChat kind of platform. Meta’s investment of around $6 billion in Reliance Industries came just a couple of months before the Indian government banned several Chinese apps from operating in the country.
“When Jio platforms and Meta announced our partnership in 2020 (April, 2020), Mark and I shared a vision of bringing more people and businesses online and creating truly innovative solutions that will add convenience to the daily lives of every Indian,” Ambani, chairman of Reliance Industries had then in a press release.
In the past, Tata Group has created an umbrella of apps under its app Tata Neu, and Paytm has also tried to bring many services including bill payments and shopping to flight and movie ticket booking on its app. However, no app so far has been able to come close to what WeChat is in China. In the first quarter of 2022, WeChat had almost 1.29 billion monthly active users, versus less than 500 million users on Paytm.
“Super apps by design haven’t really gone anywhere in India, because they’re often solutions looking for problems. However, WhatsApp, with a singular chat interface, is now deeply embedded in India’s population. If WhatsApp can integrate transactions without breaking the chat experience for users, it has the potential to go in the direction of we-chat,” said Vishwanath V, general partner at early-stage VC, 8i Ventures.
Bahl said this is a significant step towards monetisation of WhatsApp as Meta has had mentioned previously. The success of this partnership could open up WhatsApp for other such tie-ups as well. Meta has tried to stay clear of advertising as a route to monetisation and partnerships may be the way forward.
He said WeChat provides a sound blueprint for monetisation of WhatsApp’s business model and it would potentially go the WeChat route.
‘Risk of turning people off’ for WhatsApp
Vishwanath pointed out that “the risk for Meta is in WhatsApp’s utility as the universal chat app – from family & friends, to work and service providers. A poorly executed product that wrecks the primary function of WhatsApp – can turn people off it, by cluttering the non-monetizable chat with sales and – worse – advertising.”
He cautioned that feature addition can make or break the customer experience – and in India, consumers are used to single-function apps with simple interfaces (such as YouTube, WhatsApp, Facebook, Flipkart, Hotstar). Combining multiple utilities into one (such as Paytm) is tough to execute.
He also suggested that “WhatsApp as a default chat app + holding all transactions is too much power in one entity. Regulators would be wary of such a massive monopoly and are likely to actively prevent something like this from occurring if it takes off.”
“Ideally, WhatsApp would want to develop this with Jio, but offer it to all merchants – maybe even including platforms. That said, Jio might negotiate a period of exclusivity – allowing Jiomart to scale up to WhatsApp’s user base. The monetisation potential is clear – today, a merchant, even for a repeat customer – has to pay Flipkart/Amazon the full commission – or at the very least, spent money retargeting its own customers on ad networks (including FB). WhatsApp could easily provide this for much lesser, giving merchants better economics while making money for itself.”