Amazon adds 15 fulfilment centres for its grocery business, to offer perishable products

To create a specialised network for its hyperlocal grocery delivery business and have an edge over competitors in India, e-commerce major Amazon has added 15 new fulfillment centres (FCs).

All these centres are based in four cities- Bengaluru, Delhi, Mumbai and Hyderabad. In India, Amazon currently offers food products through Amazon Pantry and standalone app Amazon Now. Both platforms procure from third-party sellers. Now, Amazon is also looking to offer perishable items, outlined an ET report.

These new centres are reported to have temperature-controlled zones to store and deliver perishable products such as fruits and vegetables, dairy products, and frozen products.

Akhil Saxena, VP for customer fulfillment at Amazon India, said that with new centres for daily essentially will allow them to serve customers better serve in key metros.

Last week, it piloted from the city of Pune, becoming the firm overseas e-commerce company to stock and sell food items.

According to industry experts, hyperlocal business is considered a low margin business. Amazon moves show its focus on the segment. It can, through efficient system, improve margins and market share.

With the addition of abovementioned fulfillment centres, US-based e-tailer overall warehousing capacity has now grown to 56 fulfillment centres across 13 states with a total storage space of 13.5 million cubic feet.

The development comes on the back of significant investments and developments occurred in e-grocery and overall e-commerce segments lately. Online grocer, BigBasket recently scooped up $300 million backing from Chinese investment and e-commerce giant Alibaba.

While Grofers raised 100 Mn from Softbank, Indian e-commerce major Flipkart, who launched grocery delivery service ‘Supermart’ also in talks with Walmart to raise 5-10 billion.

Meanwhile, with the entry of Amazon, the e-grocery space will become a battleground for players such as Grofers, BigBasket and new entrant – Flipkart and upcoming entities in grocery such as Quikr and Paytm.

At present, Grofers claims to have 30 percent market share of online grocery retail while Bigbasket commands over 50 percent market share in online grocery space.

Earlier in 2016, after getting approval for food retail business, Amazon committed $500 million investment to establish the food retail business, separated from its e-commerce marketplace, and to sell directly to consumers.