Amazon could take 2-3 months before rolling out its products and start selling them online.

Amazon debuts food retailing in India becomes first foreign ecommerce firm to do so
Atom Ecommerce Monday, February 19, 2018 - 22:12

Global ecommerce major Amazon’s food-retail business India Amazon Retail India will be the first overseas ecommerce food retail venture in India, having picked up the government’s offer to allow 100% foreign investment in the food sector. And this company would be a seller on the Amazon India website and the backend operations would be based out of Pune.

Amazon could take 2-3 months before rolling out its products and begin selling them online. The business envisages an investment of $500 million and Amazon can sell packaged foods and also locally produced products and it many sell through both online and offline channels.

Other online grocery players such as BigBasket, Grofers and Supr Daily have also received an approval for food retailing.

The government had cited the purpose of job creation as the driving force behind this decision. As is known, the Ministry for Food Processing had held roadshows to attract investment in this sector but not many companies have come forward. The food-only retails business is seen as very attractive for these companies, particularly due to the low margins in this segment.

Amazon was asked to keep its marketplace distinct from the food retail venture and maintain separate management and offices.

Large players, like Walmart want to deal in multiple products to make up for this, but the current policy of the government in 100% FDI does not permit it.

Interestingly, Walmart, which is Amazon’s global rival, is eyeing Amazon’s largest rival in India ‘Flipkart’. It is looking to either acquire a large stake or buy out Flipkart. This could lead to SoftBank exiting from the company. However, as per media reports, SoftBank is against the deal as it doesn’t want to cash out this early and wants to be invested in Flipkart for the long-term.

If the deal goes through, Walmart is also likely to buy shares from existing investors Accel Partners and Naspers, apart from infusing fresh capital into the ecommerce major.

 

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