Ambani’s Reliance targets Indian fashion e-commerce with low-cost model

Reliance Industries, run by India’s richest man Mukesh Ambani, is gearing up to deploy a winning strategy from its past playbook for the fashion market: low-cost products.

Ajio, Reliance’s retail fashion arm, has quietly launched Ajio Street. The platform boasts a vast selection of clothing and accessories, starting from a price point as low as 199 Indian rupees ($2.4). According to Ajio’s website, Street guarantees the “lowest price” for its offerings, waives delivery charges, and promises a straightforward returns process.

The roll-out of Ajio Street, which has not been previously reported, coincides with a confirmation from Shein, a dominant player in the global budget fashion market hailing from China, that it has partnered with Reliance to reestablish a presence in the lucrative Indian market.

The emphasis on affordability is key in capturing market share in India’s fashion sector, analysts say, citing the region’s notoriously price-sensitive consumers.

Ajio Street website. (Screen capture)

The Indian newspaper Economic Times reported last month that Reliance plans to target consumers in smaller Indian cities and towns with Ajio Street. The newspaper also said that Street will operate on a zero-commission model, meaning sellers will not be paying any commission to the platform in a move to gain quick inroads.

Reliance’s plan also puts Ajio Street in direct competition with SoftBank and Prosus-backed Meesho, which specialises in selling low-cost longtail fashion and accessory items.

Ajio, launched in 2016, currently commands over 15% of the fashion e-commerce market in India, according to wealth management and research firm Bernstein. Flipkart, which owns fashion giant Myntra, dominates the category with over 60% market share, while Amazon is holding on to about 20% of the slice.

For Reliance, deploying an affordability-led approach to achieve market dominance has been a longstanding strategy. This was strikingly evident in the previous decade when the company dramatically shook the Indian wireless sector with the introduction of Jio – offering free voice calls and cutrate data rates. With a subscriber base now exceeding 430 million, Jio now dominates the telecommunications industry in the South Asian market.