Amazon kicks off food retail business in India from Pune

Ending a long haul of speculations and wait, finally, e-commerce major Amazon has delivered its food retail venture in India. Piloting from the city of Pune, the firm becomes the first overseas e-commerce company to stock and sell food items directly to consumers.

The Seattle-based e-commerce firm has kicked off its food retail vertical through its subsidiary Amazon Retail India and will subsequently start a private grocery label in the country.

According to an ET report, the project will take three months more to operate across the country.

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

While Grofers is in talks with its existing investors SoftBank to raise another round, Indian e-commerce major Flipkart, who launched grocery delivery service ‘Supermart’ also in talks with Walmart to raise 5-10 billion.

In 2016, the Indian government allowed 100 per cent foreign ownership in the 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.

This is because the FDI policy prohibits overseas retailers to sell any nonfood items directly to consumers. These foreign companies can only open a wholly-owned subsidiary in India to sell food products produced and or manufactured in the country via online or brick mortar stores.

Besides Amazon, online grocers Bigbasket and Grofers have also received approval for their proposals of investment for food retail. 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.

Also Read: No merger talk ever happened with Bigbasket: Grofers

In India, Amazon currently offers food products through Amazon Pantry and standalone app Amazon Now. However, both platforms procured from third-party sellers.

With the entry of Amazon, the online 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.