Amazon is making progress in its offline presence by continuing to make acquisitions of big players to catapult its market share to complement its online footprint.
Much like the company has done in the U.S with the purchase of Whole Foods, Amazon is purchasing well-known brands and acquiring startups to disrupt the offline retail space. Amazon dominates the e-commerce space with its online website but it seems the company is now looking at expanding its strategy into more offline purchasing through the use of various strategies.
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Mint reports that Amazon, along with private equity firm Samara Capital, has agreed to buy Aditya Birla Group’s food and grocery retail chain, More, which runs 523 supermarkets and 20 hypermarkets. It shows that Amazon means business when it comes to its strategy of driving its food retail business to the next level. The report continues to state that Amazon has allocated some $500 million in funds to help build its offline food retail business. It’s no surprise Amazon is making moves into the market which is estimated to be worth some $60 billion according to Morgan Stanley, with e-commerce accounting for only 2% of total retail sales.
The retail giant was in talks with RP Goenka Group’s supermarket chain, Spencer’s Retail Ltd, but the talks fell through.
The move began in September 2017 when Amazon acquired a 5% stake in Shopper’s Stop for ₹ 179.25 crores to set up experience centers, showcasing its brands in fashion and accessories. This enabled Amazon to utilize the network of 80 stores in Tier-2 and Tier-3 cities to promote the Amazon Basics brand, which includes electronic, mobile accessories and kitchen products, which aligns with Shoppers Stop’s products to allow seamless product placement.
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While the small plays are helping promote Amazon’s products in the offline space and also help the company get a foot in the market, the overall strategy is to compete with Walmart-owned Flipkart.
Mint continues to report that:
Amazon tied up with Dabur India Ltd in October to set up an e-commerce marketplace for Ayurvedic products and drugs. While managing the logistics of this business, it got access to the ₹ 18,500 crore natural care product market. In October 2016, it bought Westland Books from Tata group retail firm Trent Ltd. Amazon seems to have adopted the strategy of benefiting from partner firms’ offline presence while offering them access to its online platform.
The benefit of Amazon’s approach is to capitalize on the already established presence of other companies to hook into the existing channels that this offers, as opposed to needing to create things from scratch. This inevitably has cost savings and long-term partnerships are always a positive move.
The strategy of expanding its offline presence extends to its home country of the U.S where Amazon is considering opening up to the concept of checkout-free stores. The company plans to launch an initiative called Amazon Go that would see close to 3000 stores open within three years. This would be in addition to the 474 stores the company already has access to thanks to its acquisition of Whole Foods, which it purchased for $13.7 billion.
Seeing Amazon into the offline market would be a huge boost for the company and unlock a whole host of new customers that are yet to embrace e-commerce. Continuing the strategy of acquisitions and buy-outs will likely be expensive in the short-term but pay dividends in the long term by allowing Amazon to catapult into the market without much effort at all.
The post Amazon Bets Big on Offline Retail Space in India, Buys 49% Stake in Aditya Birla’s More Retail Chain appeared first on MySmartPrice.
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