Flipkart, Amazon hold talks to acquire stake in Aditya Birla Fashion2 min read . Updated: 22 Oct 2020, 12:10 PM IST
- Amazon and Flipkart might look at plugging the gaps across its inventory base by launching value-products focused towards new buyers, and bringing more assortments on to their platform
BENGALURU: E-commerce majors Flipkart and Amazon are in talks with Aditya Birla Fashion and Retail Ltd. (ABFRL) for a minority stake in the fashion retailer, which continues to seek investments either through a hive-off or partnerships, said individuals directly aware of the discussions.
With fashion becoming a key category for both these e-commerce firms, after smartphones and electronics, Amazon and Flipkart might look at plugging the gaps across its inventory base, by launching value-products focused towards new buyers, and bringing more assortments on to their platform, said a person, who didn’t want to be named.
“ABRFL has been struggling from the impact of covid and has been in the market for some time to raise new funds. It has been reaching out to investors as well as brands for a potential investment," said a person aware of the discussions.
Alternatively, the move could help ABFRL, to plug gaps in its e-commerce presence. While it is present online through marketplaces it has been inorganically expanding its reach online. For instance, last year, it made two investments. It acquired ethnic apparel and lifestyle retailer Jaypore that has presence both online and offline for ₹110 crore, apart from picking up a stake in designer label.
The investment deal might even help e-tailers like Amazon and Flipkart, to also leverage the offline network of ABFRL, to make faster deliveries within metros and other geographies. Flipkart has been pushing for same-day deliveries over the past few months.
“For Flipkart, this will be a part of their strategy to form deep partnerships with offline retailers to come up with new products, basis the shopping trends that they see on their platform, as several new to e-commerce customers are flocking on to online commerce this festival season," said a second individual, who didn’t want to be named.
“Owing to FDI norms, these e-commerce firms are unable to set up offline presence on their own. Hence partnerships is the best route possible," said the first person quoted above.
According to a recent report in The Economic Times, ABRFL’s talk with Amazon may have fallen through.
Offline retailers are feeling the brunt of the lockdown that severely dented footfall and sales at their stores. While business has since recovered, market dynamics have changed with new shoppers logging online to buy electronics, apparel and home furnishings.
This has prompted more retailers to get online and stitch partnerships with marketplaces.
Earlier this year, Flipkart Group bought a minority stake in Arvind Fashions Ltd’s (AFL) recently created subsidiary Arvind Youth Brands for ₹260 crore. The move will allow Arvind to expand its denim brand Flying Machine, online and in India's smaller markets. The four-decade old Flying Machine brand has been selling on Walmart-backed Flipkart and Myntra for over six years.
"The partnership with the Flipkart Group will help us accelerate our online growth strategy as we focus our efforts on developing an omni-channel retail approach for Arvind Youth Brands and Flying Machine," J. Suresh, managing director and chief executive officer, Arvind Fashions had said then.