Amazon.com, Inc. is set to kick-start online food retail in India during the Diwali season this year. The e-commerce giant might also launch a private label in near future to market local produce and packaged food products from third parties.
According to a report by The Economic Times, Amazon is planning to invest $500 million (Rs 3,181 crores) during the next five years in food retailing through its subsidiary Amazon Retail India Pvt Ltd. The subsequent launch of a private label will be on lines of the similar enterprise the e-commerce firm had undertaken in the United States.
Amazon recently received the green flag from government authorities to stock and retail food and grocery items through brick and mortar stores, on both online and offline platforms. The government is intent though, on making Amazon set up brick and mortar stores. The company, however, has refused to make any comments on taking the offline route with its retail ventures.
As of now, the US-based online shopping giant sells grocery items through Amazon Pantry in certain cities from, sourcing inventory from third-party sellers. It also provides same day grocery delivery services through its Amazon Now application which works in collaboration with retail stores like Big Bazaar and Hypercity. Venturing into the online food retail segment, it will now sell directly to customers.
Even if Amazon goes on to open brick-and-mortar stores for retailing grocery items in future, it will have to face challenge from already existing retail chains like Big Bazaar, and such. With FDI proposals for Groffers and BigBasket also being approved alongside Amazon's, the company will face challenges in the online retail sector too.
Online food retailing has seen a growth in recent years with easier availability of smartphones and better internet penetration, same reasons which drove online shopping and e-commerce as a whole.