Amazon Retail Gets $35 Mn From Parent To Up Its Game In Food Ecommerce

Amazon has invested INR 240 Cr. (approximately $35 Mn) into its food ecommerce arm Amazon Retail India. According to their Ministry of Corporate Filings accessed by Inc42, Amazon has invested through two of its entities including the existing shareholder Amazon Corporate Holdings Pvt. Limited and its US-based parent company Amazon.com.

Amazon Retail India encompasses the Amazon Pantry and Amazon Now services, which are responsible for the sale of groceries, household and other food products in India.

“Our food retail business currently serves customers in 100+ cities across India. We are on track to scale the business further by adding more selection and expanding reach to serve customers in more pin codes,” the company told ET.

Earlier in January, reports surfaced that Amazon will stop selling food products in India to comply with the country’s new foreign direct investment (FDI) ecommerce guidelines. For the uninitiated, with effect from February 1, 2019, the new guidelines prohibit online marketplaces from making more than 25% of purchases of a vendor.

However, the government had later clarified that companies with foreign direct investment (FDI) in food retail will be out of the purview of FDI ecommerce guidelines and can continue selling through ecommerce. Following which the Amazon’s grocery services resumed operations after witnessing brief pause.

Amazon India’s Food Retail Plans

Amazon grocery services had been a major plan for Amazon’s food retail plans for India, for which it has committed $500 Mn, of its $5 Bn commitment to its market in India.

Amit Agarwal, Amazon India head, had earlier said that Amazon expects groceries and household products to account for over half of its business in the country in the next five years, as it moves to broaden offerings in the segment and foray into areas such as fresh produce.

Earlier in May 2018, a Citi research report said that Amazon India is expected to reach $70 Bn in gross merchandise volume (GMV) and $11 Bn in net sales by 2027.

Due to increased internet penetration and more international retailers entering India, the country’s ecommerce has recorded an unprecedented consumer growth in the last few years. According to a Deloitte India and Retailers Association of India (RAI) report, Indian ecommerce market is currently valued at $200 Bn and is predicted to grow to $1.2 Tn by 2021.