SUMMARY
Amazon and Reliance were in discussion for 3-4 months
Amazon in talks with Max to buy minority stakes
Max has generated sales of about INR 3,500 Cr in FY2018-19
Amazon India’s plans to buy a minority stake in Mukesh Ambani-owned Reliance Retails have most likely fallen apart due to high valuations. The Seattle-based ecommerce giant reportedly saw it as a large investment, considering the government’s attempts to formulate stricter FDI norms.
The two companies have been discussing the deal since three to four months, and Amazon has initially planned on acquiring 10-25% shares in the India-based retail emarketplace. In the FY2018-2019, Reliance Retail had generated about INR 73K Cr sales across categories.
Amazon had a particular interest in Reliance’s electronic and grocery retailing business as profit margin was high. But Reliance had quoted somewhere between INR 2.5 Lakh Cr to INR 3 Lakh Cr as the price of its retail business, making Amazon rethink its decision.
The ecommerce company is now in talks with retail chain Max, which had generated sales of about INR 3,500 Cr in FY2018-19. The two companies had also entered into a trading arrangement under which Max exclusively sell its products through Amazon’s online marketplace in India.
Too Big Of A Commitment
Last month, Amazon India head Amit Agarwal had spoken about Amazon’s commitment toward India, a market where the ecommerce platform had been serving for more than 5 years. Talking about the current economic slowdown, Agarwal said that Amazon will be focusing on the long-term goal, instead of the short-term situation.
Agarwal had said all this at the launch of Amazon Campus in Hyderabad, which is Amazon’s largest facility globally and has the capacity to house 15K employees in India.’ At the event, he added, “It is actually a symbol of commitment going forward as we grow in India to continue hiring talent to attract great builders for our customers.”
Sharpening its focus on Hindi-speaking customer base, the company also has been trying to focus on enhancing user experience. Amazon gave its voice assistant Alexa an Indian touch by expanding its capabilities to accommodate regional languages. It has also included Hindi chatbots in its ecommerce for customer grievances.
Amazon has also expanded its processing units in India to support the growing demands of the large user base. In June, Amazon launched four new sort centres in Vijayawada, Ranchi, Goa and Siliguri. The company had also started strengthening its data centre business in India by funding $192.2 Mn in Amazon Data Services India (ADSI) in May.
In addition, the company has been creating job opportunities for Indians as well. The company, on Tuesday, announced that it has hired close to 90K temporary employees in preparation for its festive season sale.
