While e-commerce in India took off on the premise that organised retail has unable to serve masses, recent moves from horizontal as well as vertical e-commerce players are emphasizing that e-commerce can’t sustain without offline touch.
Right from the likes of Flipkart, Amazon, Xiaomi, and Ola to Myntra and Voonik, all seem to be in rush to ramp up the missing element – ‘the offline factor’. To beef up its positioning in a fight against global retail major Walmart in India, Amazon appears closer to buy 10 per cent stake in Future Retail.
The Jeff Bezos-led company has valued Biyani’s retail firm at around $6 billion and may pay around $600 million to acquire the aforementioned stake, reports FactorDaily citing sources.
Earlier last week, Kishore Biyani reportedly met Amazon’s chief executive, Walmart, and Alibaba to explore business synergies and potential opportunities with them. But according to sources, US e-tailer has the best chance of sealing the deal with country’s largest retail brand.
The deal would give a deeper understanding of the Indian retail market to Amazon who now is fighting Walmart. Besides, it also gives readymade customer base and insights of the Future Group, which also plans to deliver fresh fruits, vegetables and dairy items through a dedicated app.
Two weeks ago, in largest startup acquisition ever, Walmart had acquired over three-quarters of Flipkart in about $16 billion.
Vinay Bhatia, CEO, group loyalty, and analytics, Future Group, had earlier said that the app will be in line with Amazon Prime model.
Presently, Future Group has more than 950 such stores and the target is to take it to 10,000 by 2022.
Meanwhile, with Flipkart, Walmart also has a bigger plan in one of the fledgling Internet economies worldwide. It eyes building a large food and grocery business and introduce a range of new categories and services.
Since online shopper base hasn’t grown as it was projected, grocery appears enticing opportunity for Flipkart and Amazon. Both see great scale through building a large food and grocery business in India.
According to a Crisil report, online grocery will be the fastest-growing segment (around 65-70 per cent CAGR between fiscals 2017 and 2020) in e-retail and almost quadruple over the next 3 years to Rs 100 billion in terms of revenues.
Recently, the e-commerce giant’s India head Amit Agarwal had revealed that groceries and households products will account for half of the business in coming years. Currently, it offers food products through Amazon Pantry and standalone app Amazon Now. Both platforms procure from third-party sellers.
This will be Amazon’s second offline retail investment. The deal, once through, would also make e-grocery space a battleground for players such as Grofers, BigBasket, Flipkart, and Amazon. Last year in October, Jeff Bezos-led firm had bought 5 per cent stake in Shoppers Stop for $26.35 million.
However, Amazon is not the only firm that wants a pie of Future Retail. Walmart and Alibaba are also in the fray and it would be interesting to see who claims a stake in Future Group.