Ama­zon In­dia Read­ies a Full Spread for Di­wali Co set to make its on­line food re­tail­ing de­but; may start pvt la­bel in fu­ture

The Economic Times - - Front Page -

Shamb­havi Anand & Chaitali Chakravarty

New Delhi: Ama­zon is set to make its na­tion­wide de­but in on­line food re­tail­ing in In­dia dur­ing the Di­wali sea­son, ac­cord­ing to sev­eral peo­ple with knowl­edge of the plan. The com­pany, which will make its en­try through sub­sidiary Ama­zon Re­tail In­dia Pvt Ltd, sub­se­quently plans to start a pri­vate gro­cery la­bel in In­dia as it has done in the US. The move is be­ing keenly watched as it’s ex­pected to trig­ger a price war with or­gan­ised brickand-mor­tar re­tail­ers and on­line gro­cery com­pa­nies, given the US com­pany’s ag­gres­sive pric­ing strat­egy. Co plans to in­vest in food re­tail­ing via Ama­zon Re­tail In­dia Pri­vate Ltd May launch

on the lines of its US model, at a later stage

Ama­zon re­cently got gov­ern­ment ap­proval for stock­ing and sell­ing food and gro­ceries in In­dia on­line and through brickand-mor­tar stores. The com­pany plans to in­vest $500 mil­lion in the seg­ment over the next five years. Ama­zon re­cently got nod for stock­ing and sell­ing food as well as gro­ceries on both off­line and on­line plat­forms FDI pro­pos­als of Gro­fers and BigBas­ket have also been ap­proved

$500 m pri­vate la­bel in gro­cery in In­dia,

It aims to sell lo­cally pro­duced and pack­aged food prod­ucts from third par­ties and un­der its own pri­vate la­bel.

It cur­rently of­fers food prod­ucts in some In­dian ci­ties through Ama­zon Pantry from third-party sell­ers. It also of­fers same-day gro­cery de­liv­ery on its Ama­zon Now app through a tie-up with re­tail­ers such as Big Bazaar and Hyper­city in some ci­ties. It will now sell di­rectly to con­sumers. An Ama­zon In­dia spokesper­son said, “We don’t com­ment on fu­ture plans.”

Ama­zon de­buted its first pri­vate gro­cery la­bel in the US last year with prod­ucts in­clud­ing cof­fee and baby food. The pri­vate la­bel items are sold ex­clu­sively through Prime mem­ber­ship in the US and are priced lower than other pop­u­lar brands. As it ex­pands the gro­cery busi­ness in its home coun­try, it will also open off­line Ama­zon Go stores that will of­fer cus­tomers a check­out-free ex­pe­ri­ence through tech­nol­ogy. The gov­ern­ment is keen that Ama­zon open brick-and-mor­tar stores in In­dia but the com­pany is yet to de­cide on this, said a per­son aware of the devel­op­ment.

“I don’t think there is any im­me­di­ate plan,” said the per­son. The com­pany spokesper­son re­peated that it will not com­ment on fu­ture plans when asked about this. Such a move is a mat­ter of time, one ex­pert said. “Com­pa­nies have to think of re­tail as an in­te­grated ac­tiv­ity,” said De­vang­shu Datta, chief ex­ec­u­tive of re­tail con­sul­tancy firm Third Eye­sight. “Cus­tomers are go­ing ev­ery­where. If you are a multi-prod­uct, multi-brand com­pany you have to be in present in multi-for­mat. It is just a ques­tion of time that Ama­zon sets up a phys­i­cal store.”

Chief ex­ec­u­tive of a re­tail firm that op­er­ates in the gro­cery and food seg­ment said that most multi­na­tion­als will find it dif­fi­cult to make money in food re­tail be­cause their com­pli­ance stan­dards will add enor­mously to costs. “FDI (for­eign di­rect in­vest­ment) in food re­tail will never make eco­nomic sense,” he said. “It would be a hell of a task to make it prof­itable. You need an ex­tremely low-cost model like DMart to make money. Oth­er­wise it will be very chal­leng­ing.”

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