This year, we are witnessing a lot of major changes in the Indian e-commerce market. With most of us still reeling under the recent announcement of the Walmart – Flipkart acquisition, here is another juicy deal for the e-commerce market players. This time it’s global e-commerce major player, Amazon that’s making headlines, yet again.
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As always, they do something to offer in their successful online market space. Their current ongoing talks is to purchase major stakes in Spencer’s Retail. This is perfect timing as Amazon had recently been in talks to purchase and acquire a stake in the Birla grocery and supermarket chain. Well, with this latest move, it’s evident that Amazon is trying for a stable and decent position in the online Indian foods and grocery space. Last year, Amazon had also finalized a deal with Shoppers Stop with a 5% stake or holdings in the latter through its investment arm/venture Amazon NV Holdings.Definitely, Amazon is on a buying spree in the retail markets, globally.
Now, if this ‘talk’ emerges with a successful outcome, Amazon is sure to get benefit in its revenue operations. Once it starts selling varied food products directly to the Indian customers, Amazon will generate maximum profit. After all, the foreign player had already received permission from the Indian government for an investment of worth $500 million in any solely owned venture or company in India for selling varied food items including readymade products and local food manufactured in India. It is understandable that even with such permissions, one can make their mark in a new area and new market space.
Further, to describe the probable benefits of the Amazon Spencer talks, we can start with understanding the number of stores run by Spencer in India which currently stands at 128 stores in over 30 cities, including some 50+ hypermarkets and supermarkets. Spencer had also hinted at plans to open more hypermarket stores in the nearby future, the estimate is being some 40 stores. So, in many ways, Amazon is sure to gain much from this deal in the Indian e-commerce market.
A tie up with any major international retail player is always beneficial especially when it can also help in meeting other probable competitors in the particular market. In this case, the acquisition can be helpful for Amazon while dealing with already existing retail players in the Indian market, including BigBasket, Grofers, Flipkart’s Supermart, Walmart, Paytm, Alibaba etc. Alibaba is one competitor to watch out for, because of its recent top notch investments in the Indian payments and retail space.
Amazon has also a clear possibility of reaching to all tier II and tier III cities, through Spencer’s and also Birla’s and Future group’s retail stores. Spencer’s stores are located in Delhi NCR, East and South regions in India whereas Birla’s presence includes that in South, North and West India followed by Future group’s stores that are aiming to cover all major cities in India by this year.
Further on, there have been some other speculations in this regard that if the Foreign Direct Investment (FDI) rules on multi-brand retail stores in India get liberalised, Amazon will then be at an advantage to have full ownership in any of the above mentioned retail chain stores; Spencer’s, Future Retail, and more.
Customers can surely expect to get their grocery purchased promptly through Amazon Prime Now delivery including same-day delivery. Looks like there is a little something for everyone if this future deal went through.
Overall, Amazon also stands to benefit when all the three above mentioned deals go through, and can have a potential stake in over 1,500+ stores in India which in turn can be a blessing to face the probable competition from other retail players including Walmart, Flipkart, BigBasket, Reliance Retail etc.
Well, it’s just a matter of time before the big verdict is out on Amazon’s hold on the retail scene in India.
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