The Seattle-based American multinational tech-gargantuan Amazon has pronounced curative strategies to establish its compelling market presence in Indian loam. The company is actively making moves to capture a lion’s share of the food-only retail industry in India. In accordance with the regulatory filings sourced from paper.vc, Amazon Retail India Pvt. Ltd has received the sum of INR 240 Crore (approx $35 million) from existing shareholder Amazon Corporate Holdings Pvt. Ltd, a Singapore-based existence controlling the food-only retail business across ASEAN countries.
The investment also consolidated a significant token value from Amazon.com Inc, the US-based parent firm.
After the recent blows of the Indian government’s new FDI policy, the e-commerce giant channelized its Indian food-only retail Grocery & Gourmet Food’s Store which sells over 3.5 lakhs of food products online. Also, Amazon craftily claims itself to be people’s favourite one-stop shop that supplies all the needs to convert home a restaurant. Amazon also delights its shoppers with 5-10% of discounts on groceries available on its online supermarket.
This huge projected investment on online supermarket takes place after India’s amended guidelines for new FDI in e-commerce propelled in more than a month ago, which held Amazon’s food-only retail investments at risk in the beginning.
“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 pincodes,” the company said in response to queries from the newspaper.
According to market analyst and researcher Forrester, the food and grocery accounted for a whopping 61.4% of India’s total $880 billion retail market in 2018.
Previously in December last year, the Department for Promotion of Industry and Internal Trade (DPIIT), banned subsidiaries of e-commerce marketplaces from playing as merchants on the platform. Following that, the government had defined new FDI policies in the food retail sector as well. Eventually, the decision appeared to become problematic for Amazon and the Amazon Retail considered stop selling on Amazon.in from February 1, unless more clarity on the rules emerged from the government. Soon, the government has made it clear that FDI in the food-only retail sector will not get hampered by the mitigated new FDI guidelines, which are designed specifically for the e-commerce marketplaces.
If Amazon would have done so, it would have been a tremendous bang for the country, as it was the single global retailer that had perpetrated an investment which is the tune of $500 million in the food-only retail sector initiated up in mid-2016.
With the latest investment in Amazon Retail India, Amazon has upped the ante against BigBasket which has recently secured $150 million in a funding round.
Between the end of 2017 and early 2018, Amazon had transformed Amazon Retail India into a retailer of grocery items on the Amazon.in platform. The Amazon Retail India buys goods from retailers and wholesalers, then trades it beneath the Amazon Pantry storefront on its e-site. It also facilitates Prime Now, an unconventional two-hour delivery service that was propelled by Amazon in May 2018.
Amidst other kinds, Amazon is sharpening its marketing skills on grocery & gourmet, which is an evergreen dynamic business. The key strategy is to target all customers on Amazon.in and turn them to grocery buyers through exclusive discount offers and targeted ads. With the fresh recent fund immersion into Amazon Retail India Pvt. Ltd., Amazon is looking to expand inventory and its scale of operations.
Amazon’s latest fund infusion into Amazon Retail India Pvt. Ltd. closely reflects the strategy to counter Big Basket, which is highly proclaimed to be India’s largest player in the online grocery delivery space with an estimated valuation of $2.3 billion. The series F round at BigBasket was contributed by Mirae Asset, CDC Group and existing investor Alibaba.
The grocery & gourmet business is vital for e-commerce players, from Flipkart to Amazon, to keep strengthening its market presence and maintain soaring valuation. The market is largely controlled by four camps – Flipkart, Amazon, Big Basket and Grofers. Beginning of this month, Grofers also raised $60 million from SoftBank Vision Fund.