Amazon’s Grocery Biz Makes A Comeback After A Brief Pause

After it halted services of its groceries platform due to DPIIT’s (Department for Promotion of Industry and Internal Trade) refusal to postpone the deadline on the FDI ecommerce rule from Feb 1, global ecommerce giant Amazon is getting back in the groceries game.

A Reuters report said that on Tuesday (February 5), that Amazon Pantry was offering select food products, such as cookies and tea, in New Delhi and Mumbai. Even though some users could place the orders, others were seen complaining on Twitter for not being able to do so.

Inc42 also tried to place an order and access products on the company’s Prime Now app for groceries and found several usually-listed products. The order was processed seamlessly.

According to the Reuters report, Amazon was using government permission to sell some Pantry grocery products via an affiliate.

It is to be noted that 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.

The company has been having a tough time getting through with sellers in which Amazon doesn’t have a direct or indirect equity stake, under the new rules. The changes in FDI rules for ecommerce also prohibit large online marketplaces for selling exclusive products.

In the last six days, the company has been a part of a large overhaul of its plans and is trying to get a cusp of how to move forward under the new rules. The company and its arch rival Walmart saw nearly 50% fall in its market cap after the implementation of the rules.

While Nasdaq-listed Amazon’s shares fell by 5.38% to $1,626.23, losing $45.22 Bn, Walmart’s share price fell by 2.06% to $93.86 on the New York Stock Exchange, losing $5.7 Bn in market capitalisation. At the close of trade on Friday in the US, Amazon was valued at $795.18 Bn while Walmart was at $272.69 Bn.

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. However, such big policy change may derail its growth plans in India.

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