Amazon is growing its grocery biz in India
Food and grocery are the largest portion of India’s retail market.
- Currently, organised retailers account for $25 billion or 4% of India’s annual $580 billion food and grocery market and their share is expected to grow to $69 billion or 7% by 2024, according to Axis Capital. Thus, organised retailers including e-commerce companies have a great headroom to expand in this sector.
- US based online retail giant Amazon is focusing on the growing grocery business in India, a segment where large corporations are alleged to be a threat to small storekeepers. Amazon’s ambition is to have the largest wallet share of customers for grocery purchases. It plans to achieve its goal through a combination of formats including Amazon Fresh, Amazon Pantry and delivery of daily items from brick and mortar outlets of partner retailers, More and Future Group.
- Amazon India Country Head Amit Agarwal says that the sheer online reach and e-commerce volumes help vendors to reduce margins and still make a better return on investment. Technology helps sellers to reduce their defect rate and cost of operations. He further states, “Some sellers are realising that selling a thousand bottles of a product at lower profit is better than selling just 10 bottles at higher profit. Whenever there is disruption, confusion and uproar are bound to follow”.
- Amazon is reminding people that this is about long term. Disruption is happening, there is going to be confusion. There are going to be questions. There is going to be inspection because the disruption is very new. So, we should not be surprised by it, rather we should expect it.
- Agarwal thinks that instead of trying to look at it as a distraction, we need to look at it as short-term opportunities to educate, inform and engage. However, it doesn’t change Amazon’s long-term goal which is to turn India into its largest overseas subsidiary. Amazon has continuously poured billions of dollars into the country it counts as one of the most promising future markets and plans on further growing and serving the Indian consumers seamlessly.