Becoming the official e-Commerce sales channel for Future Retail Group is Amazon’s latest move toward establishing a stronghold in India. Future Retail operates six retail chains, including popular hypermarket Big Bazaar, and has more than 1,500 stores across India.
The Amazon partnership will allow customers to order products from any of these chains online, with those in Delhi, Mumbai, Bengaluru and Hyderabad eligible to have them delivered via Amazon India’s Prime Now two-hour delivery program.
The two retail giants are primarily focusing on grocery, general merchandise, fashion, apparel and beauty products.Amazon and Future Retail also will create a team dedicated to growing sales through initiatives in areas like distribution and marketing.
Amazon already had acquired a 49% stake in Future Coupons, a subsidiary of Future Retail, in August 2019.
India has been a long-sought-after market for Amazon and Walmart alike, with both companies vying to acquire Indian e-Commerce giant Flipkart in 2018. Walmart won that battle, acquiring a 77% majority stake in Flipkart for $16 billion, but market entry has been difficult even for these major players due to internal government regulations, particularly those related to e-Commerce.
Indian regulations ban exclusive sales, preventing retailers from selling products on platforms they count as investors and placing restrictions on discounts and cashback promotions. Additionally, India has outlined another draft policy that focuses on data localization, improved privacy safeguards and measures to combat the sale of counterfeit products. These moves, designed to restrict the cross-border flow of data, require all e-Commerce sites or apps to have a locally registered business entity, increasing the cost of conducting business online.
Despite its regulatory barriers, India is the only market that has seen overall retail sales growth surpass 10% every year since 2015 — even beating out China’s growth totals, according to Euromonitor International. India’s retail market will be worth $1.4 trillion by 2021, according to the 2019 Global Retail Development Index produced by consulting firm A.T. Kearney. But e-Commerce currently accounts for less than 5% of total retail, suggesting that there is more room for online growth.
In 2014, Jeff Bezos pledged a total of $5 billion to Amazon’s Indian operations in an effort to expand into the market. As of November 2019, Amazon has pumped $634.2 million into its Indian subsidiaries, focusing on its retail, food and payments units, according to documents filed with India’s Registrar of Companies.
In September 2017, Amazon’s investment arm NV Investment Holdings bought a nearly 5% stake in Indian retailer Shoppers Stop, giving the company an exclusive flagship store on the Amazon marketplace. In September 2018, Amazon and Indian private equity firm Samara Capital acquired More, an Indian supermarket and hypermarket chain, for $580.35 million.