In what could be one of the biggest developments in retail space in India, Jeff Bezos-led e-commerce marketplace Amazon is in talks with Mukesh Ambani-led Reliance Retail to acquire 26% stake in country’s biggest physical retailer.
The talks are said to be at an initial stage.
US-based e-comm major, as per ET report, reached out to Reliance as it sees long term expansion vision in India, which is considered one of the fastest-growing markets.
According to the report, Amazon is impressed with Reliance Retail’s market position in electronics, mobile phones, and grocery stores.
The Seattle-based company is also cautious to not violate Press Note 2 by not buying more than 26% stake in Reliance Retail. This structure will allow Amazon to list the retail arm of Reliance as a seller on the marketplace.
Marketplace firms are barred from owning more than 26% stake in sellers under Foreign Direct Investment (FDI).
The deal which is far from fructification will help Reliance to reduce its debt, which had reached Rs 2.88 lakh crore by June-end. It’s worth noting that the company was also in talks with Alibaba for investment last year. However, the conversation didn’t progress.
Reliance’s much talked about e-commerce foray has exposed Amazon and Flipkart to a new competitor with a very deep pocket. Many experts anticipate that it may disrupt e-commerce as it did telecom.
Amazon and Reliance might have realized that fighting against each other is not worth their while. Hence, they are considering a collaboration.
Commenting on these reports about a plausible deal, Reliance only said that they evaluate various opportunities on an ongoing basis.
Currently, Ambani-led firm operates over 10K retail stores in close to 7K cities.
Whereas Amazon has also been aggressively looking to expand its footprints in India. In September last year, Amazon acquired 49% stake in Aditya Birla Retail Limited run More, which is the fourth largest supermarket chain in India.
It is also in advance stage to acquire a stake in Kishore Biyani-led Future Retail, which runs Easy Day and Big Bazaar. It is also planning to foray into the food delivery business and is in talks with UberEats for possible acquisition.