Amazon has invested $1.5 Mn (INR 10.5 Cr) in its Indian food retail arm, Amazon Retail India, as per regulatory filings. Amazon Retail is also a vendor on Amazon’s Pantry and Prime Now grocery offerings.
The US-based etailer received the final nod from the Indian government in July 2017 to invest $500 Mn in India’s food retail space.
After facing certain delays due to government norms in February, Amazon Retail started its pilot services in Pune. It will now sell locally made and packaged food to consumers directly and is looking to completely roll out its food retailing business in the country within a quarter.
The report has surfaced at a time when Walmart has reportedly backtracked from its plans to be directly involved in food retail in India. This decision came after Walmart acquired Flipkart for $16 Bn.
Walmart would now prefer to have a presence in the food products market through third-party retailers on Flipkart, which in turn will enable it to escape the scrutiny and riders associated with foreign direct investment of up to 100% in food-only retailing ventures.
This opens up a less-crowded segment (for now) for Amazon Retail to create its dominance, in comparison with the ecommerce and hyperlocal grocery sectors where players like Flipkart and Paytm Mall are aiming to gain the top spot. But still, Amazon Retail will have to face the heat from existing players like Grofers, Bigbasket, and Supr Daily, among others in this segment.
Reports also surfaced recently that Kishore Biyani’s Future Group aims to enter the milk and dairy products delivery segment. Once the model is in place, other verticals such as fruits, vegetables, and groceries will be added.
Future Group also plans to increase its network of Easyday outlets to 10K by 2022 from the present 950 stores and is in talks with various logistics firms for last-mile delivery of daily essentials.
So far, the global ecommerce giant has been focussing on creating a solid last-mile delivery network to create an edge for itself. Earlier this year, it opened 15 fulfilment centres to create a specialised network for its hyperlocal grocery delivery business on Amazon Now.
With the latest addition, Amazon Now has 56 fulfilment centres across 13 states with a storage space of 13.5 Mn cubic feet. Of this, it will have 120K cubic feet of space.
With Flipkart also piloting its grocery delivery app in Bengaluru and Walmart looking to drive its food retail plans over Flipkart, it’s certainly a tough road ahead for Amazon.