US-based e-commerce giant Amazon is planning to venture into the Indian retail market. At present, the e-tailer is in discussions with one of the country’s largest retailers Future Retail Ltd. to have a stake in the company.
Amazon is conferring with Future Retail Ltd. to buy almost 10 per cent stake in the company, according to the daily news, Bloomberg. The anonymous sources have told the cited media that the US-based company plans to strengthen its footprint in the brick-and-mortar segment in one of the world’s fastest-growing retail markets.
In the financial year 2018-19, Future Retail has made a net profit of INR 733 crore, which is 19.18 per cent higher than the previous financial year, according to its annual report 2018-19. By making a transaction with Amazon, the Indian retailer plans to increase its valuation by INR 20 billion, as per the cited media report.
The anonymous sources told the daily news, Bloomberg, “the sale is likely to be routed through a holding company, they said, and will give Amazon the option to buy more shares from Kishore Biyani, Future Retail’s founder and chairman.”
A Move to Foray in the Indian Market
Earlier on, Amazon had acquired Whole Foods Market Inc. for $13.7 billion in 2017. By joining hands with Future Retail, Amazon will be getting more exposure to the Indian market and further increase its footprint in the American food retailing niche.
The proposed transaction has many more benefits associated with it. Most importantly, the US-based e-commerce company will enable to foray in the Indian market and meet the rising demand for home-delivered services, as well as products, such as vegetables and household products.
Taking over the Indian Market
Being the fastest-growing market, India has attracted many investors and foreign companies in the past. Walmart, Softbank and Chan Zuckerberg are some of the investors, which have upheld the homegrown companies.
Similar to this, the American e-commerce giant plans to invade the country through a channel of supermarkets and hypermarkets. By doing this, the e-commerce company will be moving along or ahead of its adversaries, namely Walmart and the proposed venture of Mukesh Ambani. The e-commerce segment in the country is disrupting since new as well as existing companies are coming with new strategies to attract consumers.
In the previous year, Walmart had acquired an Indian e-commerce firm Flipkart for $16 billion. Further, the acquirer has now introduced a local unit, which sells products only to small grocery outlets. On the other hand, Mukesh Ambani, who is Asia’s richest businessman, is planning to venture in the e-commerce sector by merging online as well as offline retailing business.
To keep pace along with competitors, Amazon had strategised to buy a small chunk of shares in the Indian brick-and-mortar businesses such as Aditya Birla Group’s grocery chain and Shoppers’ Stop.