Home >Markets >Mark To Market >Why Future Group scaling down e-commerce operations makes sense

According to a Mint news report, Kishore Biyani-led Future Group has scaled down its e-commerce venture. The report added that the Future Group has recently shuttered many of its EasyDay stores amid little traction for its EasyDay grocery app.

The move isn’t surprising. “With rapid expansion, the costs for the company have gone up, and in order to control the costs of their Easy day stores, Future Group has recently shutdown some of its loss-making stores. This is bound to have an impact on their ecommerce operations as well," said Vishnu Vardhan, senior research analyst at Euromonitor International.

The fact that the group has a tie-up with Amazon means that it will continue to benefit on the e-commerce side of things through the partnership. “Now that they have a partnership with Amazon, it doesn’t make sense for Future Group to invest and burn money as such. Already, the larger guys, Amazon and Flipkart have increased their investments at a time when Reliance Jio is set to enter the market," says Himanshu Nayyar, analyst at Systematix Shares and Stocks (India) Ltd.

In other words, why interfere when the big boys are throwing large sums of money at the India e-commerce opportunity. “Future group will continue to focus on Easy day stores. However, this will be at a controlled cost and higher efficiency," adds Vardhan.

According to a recent agreement, Amazon will become the official online sales channel for FRL. “The agreement provides FRL an access to Amazon's online platform to expand the reach of FRL stores and its consumer brands through Amazon’s market place," wrote analysts from Antique Stock Broking Ltd in a report on 7 January.

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