What Amazon-More deal means for offline retail in India

New Delhi: Amazon has been making inroads into India’s offline space since last year, much like in the US, through partnerships and acquisitions of well-known consumer brands and start-ups. Mint analyses how it is trying to disrupt the offline retail space for a bigger slice of the pie.

What does Amazon’s purchase of Aditya Birla’s More mean?

Amazon, along with private equity firm Samara Capital, has agreed to buy Aditya Birla Group’s food and grocery retail chain, More, which runs 523 supermarkets and 20 hypermarkets. The buy doubles down on Amazon’s strategy to build its food retail business and groceries, for which it has allocated $500 million. The retail giant was in talks with RP Goenka Group’s supermarket chain, Spencer’s Retail Ltd, but the talks fell through. It makes sense for Amazon to tap into the $60 billion organized retail market, given e-commerce is just 2% of total retail sales, according to Morgan Stanley.

Why did Amazon acquire a stake in departmental chain Shoppers Stop?

In September 2017, Amazon said it had picked up a 5% stake in Shopper’s Stop for ₹ 179.25 crore to set up experience centres, showcasing its brands in fashion and accessories. This marked its entry into India’s offline market, where it is using the Shoppers Stop network of 80 departmental stores, and others, in Tier-2 and Tier-3 cities. Its private label brand, Amazon Basics, includes electronic, mobile accessories and kitchen products, which aligns with Shoppers Stop’s merchandize mix, giving it the perfect match for expanding its offline presence.

Will the offline play help compete with Walmart?

Amazon’s offline play will help the firm in its battle with Walmart-owned Flipkart, which has no offline partnerships. Flipkart’s arm, Myntra, however, plans to open offline stores.

How is Amazon’s strategy to bring offline stores onto its e-commerce portal working?

Amazon tied up with Dabur India Ltd in October to set up an e-commerce marketplace for Ayurvedic products and drugs. While managing the logistics of this business, it got access to the ₹ 18,500 crore natural care product market. In October 2016, it bought Westland Books from Tata group retail firm Trent Ltd. Amazon seems to have adopted the strategy of benefiting from partner firms’ offline presence while offering them access to its online platform.

What is Amazon doing in the US offline space?

According to a Bloomberg report, Amazon is considering opening up to the concept of checkout-free stores and plans to open 3,000 such stores under Amazon Go within three years. The company has been making big moves offline in its home market. Last June, it made its biggest purchase ever, buying premium grocery store chain Whole Foods for $13.7 billion. The acquisition gave Amazon access to 474 stores in the US, Canada and the UK.