Five reasons why the Reliance Jio deal is a win-win for Facebook

By Kiran Kumar, Research Manager, TechVision, Frost & Sullivan

Facebook’s decision to invest $5.7 billion or ₹ 43,574 crores in Reliance-owned Jio Platforms makes them their largest minority stakeholder. The key announcement that followed the deal was the partnership between JioMart and WhatsApp.

Here are our five key takeaways from this announcement.

1. Tap into the Unorganized Retail Sector: Bringing together JioMart - the online grocery delivery platform and WhatsApp, allows Facebook to connect millions of consumers with neighborhood Kirana stores and other small businesses, which continue to be the fabric of the unorganized retail sector in India. Industry estimates indicate the target audience is likely to be around 60 million small businesses across the country.
2. Enable Social Commerce: This will allow Facebook to facilitate a burgeoning marketplace, enabling resellers, SMBs, and micro-entrepreneurs to connect with potential customers/buyers using social media. This is not the first time Facebook has shown interest in this growing community. In 2019, Facebook bought a minority stake in Meesho, which is one of India’s fastest-growing social commerce platforms.
3. Drive Digital Payments: In the long term, Facebook’s investment in Jio may potentially serve as a ticket to drive its payments business. WhatsApp Pay was launched in India earlier this year. Although it is currently facing regulatory issues around data localization, efforts are being taken to get the regulatory approval. This deal could serve as a shot in the arm and allow WhatsApp Pay to compete with the likes of Google Pay, Phone Pe, PayTM, etc in the digital payments space. Frost & Sullivan’s analysis indicates that WhatsApp will eventually allow consumers to pay for items bought on JioMart from the messaging app as well.
4. Economic Opportunity: For Facebook, this partnership will expand its economic opportunity across India, especially for its digital advertising platform. This partnership augurs well for India too, where WhatsApp is the top messaging app. WhatsApp and Facebook have helped drive internet access to millions and this partnership will continue to accelerate the shift towards digitization in India. In the long run, this could also positively impact employment, with newer delivery jobs being added in India. In light of the COVID-19 impact, this partnership re-affirms that India is being considered as a new growth epicenter for enterprises across the globe.
5. Another Step towards ‘Reboot’: Facebook has come under fire in the past, with issues ranging from net neutrality to Pegasus spyware. It has also come under increasing scrutiny by the Government of India. This has taken a toll on Facebook’s user perception. This deal could potentially serve as an added incentive for Facebook to leverage Jio’s user base and allay some fears by investing in India’s growth story.