What you need to know
- Facebook just became Jio's largest minority shareholder by shelling out $5.7 billion to acquire a 9.99% stake in Jio Platforms.
- Jio has transformed India's telecom market in the last four years, and now has 388 million subscribers.
- Facebook says the investment in Jio will allow the social network to 'open up commerce opportunities for people across India.'
- Ultimately, Facebook wants to bring Jio's small business platform to WhatsApp, enabling users to make purchases directly on the messaging service.
Facebook just made a major play in the telecom industry by investing $5.7 billion to pick up a 9.99% equity stake in India's Jio Platforms, a wholly-owned subsidiary of Reliance Jio. Jio fundamentally altered India's telecom industry in the last four year, and with 388 million subscribers, it is now the leading cellular network in the country.
Facebook wants to turn WhatsApp into an e-commerce platform, and that starts with JioMart.
At a first glance, it doesn't make much sense for Facebook to invest in Reliance, but the social networking giant has a clear strategy here: Facebook wants to bring JioMart — Jio's small business platform — to WhatsApp, enabling users to connect with businesses. With over 400 million users, India is WhatsApp's largest market by some margin, and Facebook is now looking to use that scale to turn the platform into an e-commerce destination.
Facebook has yet to figure out a monetization plan for WhatsApp, but an e-commerce play makes a lot of sense considering just how ubiquitous WhatsApp usage is in the country. By teaming up with JioMart, Facebook will be easily able to bring millions of small merchants to its messaging platform.
The press release from Reliance Jio indicates as much, with the company noting that WhatsApp users will be able to access local stores and buy products directly on the platform:
WhatsApp already plays an important role in helping people and businesses connect in India. Reliance Retail's New Commerce platform, JioMart, is being built in partnership with millions of small merchants and kirana shops to empower them to better serve the needs of Indian consumers. The companies will work closely to ensure that consumers are able to access the nearest kiranas who can provide products and services to their homes by transacting seamlessly with JioMart using WhatsApp.
Facebook's press release also hints at a similar move:
India is in the midst of one of the most dynamic social and economic transformations the world has ever seen, driven by the rapid adoption of digital technologies. In just the past five years, more than 560 million people in India have gained access to the internet.
Our goal is to enable new opportunities for businesses of all sizes, but especially for the more than 60 million small businesses across India. They account for the majority of jobs in the country, and form the heart and soul of rural and urban communities alike. In the face of the coronavirus, it is important that we both combat this global pandemic now, and lay the groundwork to help people and businesses in the years to come.
One focus of our collaboration with Jio will be creating new ways for people and businesses to operate more effectively in the growing digital economy. For instance, by bringing together JioMart, Jio's small business initiative, with the power of WhatsApp, we can enable people to connect with businesses, shop and ultimately purchase products in a seamless mobile experience.
It will be interesting to see how Facebook plans to roll out e-commerce transactions within WhatsApp, but the investment in Reliance ensures that it can count on millions of small businesses making their way to the platform.