Amazon becomes first foreign ecommerce firm to enter food retail venture in India

download (3)Source: LiveMint.com, Feb 19, 2018

NEW DELHI: Amazon has rolled out its own food retailing business in India with a pilot in Pune, becoming the first foreign ecommerce firm to stock and sell food items directly to consumers.

“Amazon is now a vendor on Amazon.in and is currently operating in Pune,” said a person familiar with the development. The products are sold by Amazon Retail India Pvt. Ltd.Another person said it will take “at least a quarter” for the ecommerce major to roll out its food retailing business nationwide.

Amazon had last year secured the government’s permission to invest $500 million in a wholly-owned venture to retail locally produced and packaged food products through offline and online channels. It is the only global entity to have applied for the food-only retailing business, an area where the government allowed 100% overseas investment in 2016 to help producers and generate employment.

“We continue to be on track to launch our food retail business in India,” an Amazon India spokesperson said without giving details. The development comes at a time when Amazon’s global rival Walmart is in talks to purchase a stake in India’s homegrown ecommerce company Flipkart.

When India opened food-only retailing to foreign direct investment (FDI) in 2016, food processing industries minister Harsimrat Kaur Badal staged roadshows in London to woo retailers such as Tesco and Marks & Spencer but the response was muted.

Global retailers including Walmart have shied away from the segment, arguing that selling only low-margin food items does not make economic sense and such ventures should be allowed to stock non-food items such as shampoos to detergent soaps.

The government, while clearing Amazon’s proposal in July, asked it to maintain separate management and offices for the venture and keep them distinct from its marketplace business which is not allowed to sell products directly to consumers. Foreign-funded BigBasket, Grofers and Supr Daily have also received similar approval for food retailing.

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