Amazon India may enter online food retailing business during Diwali
Amazon, after receiving the go ahead from the government, will make its Indian debut into online food retailing during the Diwali season. This nationwide entry will be made via its subsidiary Amazon Retail India Pvt Ltd. According to people privy to the matter, it even has plans of setting up its own private grocery label, as it has already done in America. Here's more.
This may start a price war
With this move, the online retail giant may kick-start an intense price war with traditional brick and-mortar retailers and other Indian online grocery firms. This is due to the fact that Amazon India is expected to have an aggressive pricing strategy aimed at consolidating the market. A massive price drop would cause major discomfort among local vendors and small establishments, and disrupt their businesses.
What's the plan?
Once ready, the US e-commerce giant's own private label will sell locally acquired produce and packaged food items from third parties. It plans to spend $500 million in this segment over the next five years to get a strong grip on the market. Currently, it provides same-day grocery delivery and Amazon Pantry in select cities via tie-ups and sourcing from third-party sellers.
No brick-and-mortar presence immediately
Although the government wants Amazon to open brick-and-mortar stores in India, the firm is still mulling on it and it doesn't have any immediate plans for the same. It is yet to open offline Amazon Go stores in the US, where it has already launched a private grocery label. The firm plans to expand first and then delve into the offline end of things.
It's a matter of time
However, according to an expert consulted by ET, Amazon having an offline presence is a matter of time. He argues that a multi-product, multi-brand firm needs to be present in a multi-format to address a wider spectrum of consumers. Firms will now have to approach retail as an integrated activity. Amazon spokesperson, upon query, said that the firm will not comment on future plans.
