Home >industry >retail >Amazon makes its presence felt in India’s offline retail market

Mumbai: Amazon.com Inc., the world’s largest e-commerce firm, is making its presence felt in India’s $60 billion organized retail market, much like it has been doing in the US.

Through a series of acquisitions and tie-ups, Amazon has started making inroads into well-known consumer goods and retail brands in India to bring its brands to people who are not yet part of the e-commerce market. At present e-commerce penetration is at 2% of all retail sales, according to Morgan Stanley.

In September, Amazon.com Inc. announced it was buying a 5% stake in departmental store chain Shoppers Stop Ltd for Rs179.25 crore, Mint reported on 23 September. Amazon plans to use this partnership to set up “Amazon Experience Centres" where it can showcase its brands—mostly in fashion and accessories.

Shoppers Stop had a network of 80 departmental stores in India as of 30 June in all top cities and a number of Tier 2 and Tier 3 towns including Durgapur and Siliguri in West Bengal, Latur in Maharashtra, Ranchi in Jharkhand and Raipur in Chhattisgarh.

“This is still a work in progress and we will be able to share more details by Q4 (quarter ending March 2018)," Shoppers Stop managing director Govind Shrikhande had said in a 23 September interview.

Amazon now has access to this network. The company’s private-label brands include AmazonBasics, under which it sells electronic and mobile accessories, luggage, stationery and dining and kitchen products. This fits with Shoppers Stop’s merchandise mix—35.3% of its sales for the quarter ended 30 June came from the non-apparel segment which largely consists of home and electronic items, and personal accessories.

Amazon India declined to comment on its plans regarding the Shoppers Stop agreement.

Meanwhile, the company has also partnered with consumer goods firm Dabur India Ltd to set up an e-commerce portal to sell Ayurvedic products and medicines in India, according to a statement from Dabur on 22 September.

“This is not a joint venture," Krishan Kumar Chutani, executive director, consumer business, Dabur, said in an emailed response. “We have joined hands with Amazon to set up an online marketplace exclusively for Ayurveda where all Ayurvedic products and medicines will be sold. The exclusive Ayurveda e-marketplace has been hosted by Amazon India and the content developed by Dabur India."

While Amazon manages the logistics of e-commerce in Ayurveda, it also gains access to brands and consumers in a fast-growing space. Market research firm Nielsen India found that “natural" products, including Ayurvedic ones, now account for 41% of India’s personal care market worth Rs18,500 crore.

That’s a market that Amazon will be able to participate in more deeply with brands such as Patanjali Ayurved Ltd and Himalaya Drug Co. selling on the website.

Amazon India declined to comment on its plans for the partnership with Dabur.

The two partnerships come after Amazon India acquired publishing house Westland Books in October last year from Tata group retail firm Trent Ltd for an undisclosed amount. The idea was to help Westland Books authors increase the reach of their books via online sales on Amazon.in, Mint had reported on 28 October last year.

Both Amazon India and Westland Books declined to comment.

Both investments—in Westland Books and Shopper’s Stop—were made via Amazon.com Inc.’s global investment arm Amazon.com NV Investment Holding, Inc.

The partnerships and acquisitions follow the same pattern Amazon is following in the US, its home market. Its latest and biggest acquisition was the physical premium grocery store chain Whole Foods which it bought for $13.7 billion in June this year, allowing it access to 474 stores in the US, Canada, and the UK, pitting it against the US’s biggest physical retailer Wal-Mart Inc.

Amazon’s strategy to penetrate India’s retail market also comes under a regulatory regime that does not allow foreign direct investment in multi-brand physical retail or in inventory-led e-commerce firms.

This comes at a time when rival Flipkart is refocusing on smartphone sales to help the company turn a profit, signalling that the company is still focused on India’s relatively nascent e-commerce market. “In India, because the categories that become large in e-commerce generally happen to be those that can be dominated by horizontals—which is electronics and fashion," Parag Gupta, executive director of Morgan Stanley India, said in an interview on 12 October.

“Given that e-commerce penetration has just touched the surface in India, online penetration in electronics and fashion/apparel is still very low. A large chunk of growth in e-commerce, in our view, will still come from these two categories, going forward."

Subscribe to newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperLivemint.com is now on Telegram. Join Livemint channel in your Telegram and stay updated

Close
×
My Reads Logout