Reliance Industries’ online wholesale platform, JioMart, has reportedly laid off over 1,000 employees as part of a cost-cutting strategy and in alignment with its newly-acquired Metro Cash and Carry.
What Happened? According to Economic Times’ sources, this is part of a broader plan to decrease its 15,000-strong wholesale workforce by two-thirds in the coming weeks.
Over the past few days, the company has asked more than 1,000 employees, including 500 executives at its corporate office, to resign. Additionally, it plans to lay off hundreds more, with many employees already placed on a performance improvement plan.
After Reliance cut fixed pay salaries, the remaining sales employees shifted to a variable pay structure. The business-to-business (B2B) format of Reliance replaces traditional distributors for kirana stores. The incorporation of Metro’s 3,500 permanent employees has led to role overlaps in backend and online sales operations.
Following a price war in the B2B grocery space through deep discounting, JioMart now aims to enhance margins and cut losses. The company plans to close over half of its 150 fulfilment centres that supply groceries and merchandise to local stores.
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Reliance controls over half of India’s organised retail market, gaining increased leverage over supplies. Experts indicate that consumer product companies are increasingly moving to online B2B, either supplementing their current distribution network or replacing ineffective traditional distributors.
According to Redseer, eB2B platforms could offer a return on investment of 50%, significantly superior to offline retail and cash and carry formats. However, experts believe there’s limited scope for new players to draw retailers away from distributors.
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