Home / Industry / Retail /  Amazon readies plan B to deal with a legal setback

MUMBAI : Amazon.com Inc. is embarking on a massive India expansion plan, including a series of tie-ups with regional retail chains, to ensure that a legal setback in the case with Future Group does not upset its long-term plans for the country, two people familiar with the company’s plans said.

“Even if Amazon loses the Future case, it’s not fatal to Amazon by any means. The Future Group case is more about Amazon’s emphasis that contractual obligations do matter in India," one of the two people said, adding that Amazon’s organic investment plans are much larger than these investments.

Amazon’s plans indicate that the US e-commerce giant will double down on its India investments and intensify pressure on rivals such as Walmart Inc.-run Flipkart and Mukesh Ambani-controlled Reliance Industries Ltd.

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What is on the table

If Amazon’s expansion plan goes well, losing Future Group as a partner may not matter much for Jeff Bezos’s India ambitions, the people said.

“India is one of the very few nations to be on Amazon’s top priority list for some serious expansion," said the second person, who is directly involved in drafting Amazon’s global expansion strategies.

The Seattle-based firm is also looking to increase the number of sellers (small businesses and stores) on its India platform by 40% within a year, the people said on condition of anonymity.

It is also planning to bring in at least 300,000 sellers to sell India-made products to customers in the US, Europe, West Asia, Japan and other developed nations over the next four years.

Amazon expects to more than triple its exports from India to $10 billion over the next four years through this initiative, the people said.

To cater to the sellers and demand from smaller towns, Amazon will increase the number of its large warehouses, or fulfilment centres, in India by 30% in a year from the current 70, the second person said.

“By the end of the year, Amazon is looking to have 100-120 such centres in India, so that customers even in remote locations get speedy delivery like in the metros," the person said. “Our warehouses are of about 400,000 sq. ft each. In Mumbai alone, Amazon has four such huge warehouses."

Currently, Amazon has tie-ups with more than 700,000 sellers and a third-party partner network that helps small businesses ready to go online.

“More than 50% of these come from small towns outside of the top 10 metros, and that’s why Amazon is building logistics capacity. In the past 15 months, around 250,000 sellers came on board," said the second person.

Amazon has more than 70,000 businesses that are selling their products through the ‘global sellers’ programme, which enables them to export their products.

Two years ago, no one knew this company called Vahdam Tea, said the first person mentioned above. They are now a well-known seller in the US after Oprah Winfrey mentioned the company in her show.

“Amazon is creating a new delivery mechanism for India, which allows sellers in India, especially small ones, to use their infrastructure with Amazon’s technology," said the first person.

As far as large tie-ups go, other than retail store chains More (which has over 600 stores) and Future Group, Amazon has a strategic investment in Shoppers Stop.

More is the fourth largest supermarket chain after Future Group, Reliance Retail and D-Mart.

Shoppers Stop stores are mostly spread across mid-size and large cities.

Amazon plans to tie up with chains of retail stores that serve a particular region.

“For instance, we have tied up with Sangeeta Mobiles in Bangalore. It’s a small local chain, working like a neighbourhood shop. These people have started looking at ways to go online. We started with 5,000 such stores last year. We now have over 50,000," said the first person.

An Amazon India spokesperson said: “In this digital world, we will continue to innovate on behalf of our customers by working with small and medium businesses in our ecosystem to enable; we remain committed to bringing new tools, technology and innovation that will unleash the entrepreneurial spirit of Indian businesses, boost exports from the country, help create jobs at scale and contribute to the vision of an Aatmanirbhar Bharat."


Anirudh Laskar

Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.
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