Amazon plans to open first physical food-only outlets in India; to sell local products on offline & online platforms

Highlights:

1. The US-based e-commerce company has sought the Government of India's approval to open food-only outlets along with an online platform to sell the locally produced items

2. The company's grocery store subsidiary is looking to invest Rs 3,500 crore over the next five years into the country and sell third-party or its own private labels of locally produced and packaged food products 

3. It will open its first grocery store to the public in Seattle in the United States (US) in 2017

Amazon is reported to open food-only stores in India to sell  'Made in India' products into the country, The Economic Times reported on Thursday.

The US-based e-commerce company has sought the Government of India's approval to open food-only outlets along with an online platform to sell the locally produced items, the report said. 

Amazon plans to undertake “retail trading of food products (produced or manufactured in India) to customers at any location through any channel, offline or online, including e-commerce, across India,” cited the report quoting a person who saw the application filed by Singapore-based Amazon Corporate Holding, which will hold 99% of the proposed entity with the rest owned by Amazon.com Inc, Mauritius.

The e-commerce company's upcoming grocery store subsidiary is looking to invest Rs 3,500 crore over the next five years into the country and sell third-party or its own private labels of locally produced and packaged food products. 

The Government of India announced 100% foreign direct investment (FDI) legislation in food-only retailing segment in June last year, whereby allowing 100% FDI for companies selling locally sourced and produced food items.

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“We are excited by the government’s continued efforts to encourage FDI in India for a stronger food supply chain,” the report said quoting Amazon India as saying in a statement. 

The company is planning to open concept stores to sell locally produced products into the country if it gets an approval from the government.

“We have sought an approval to invest and partner with the government in achieving this vision. What might work well is opening some concept stores to showcase some of the products,” it said quoting  AT Kearney partner Abhishek Malhotra, as saying.  

“Opening some stores in select locations, airports, high streets, malls to showcase the breadth of the offering — that might be done. In this case, it gives the flexibility to do that,” Malhotra further added.  

The news report citing person familiar with its application said  Amazon has told the Department of Industrial Policy and Promotion (DIPP) that it plans to develop infrastructure, including warehouses and distribution facilities such as a temperature-controlled supply chain to undertake farm-to-fork retailing of food items. The DIPP formulates the FDI policy in India and gives approval and facilitates foreign investments into the country.

Amazon opened its first physical stores in November 2015 with the launch of Amazon Books in Seattle followed by outlets in Portland and San Diego. 

It will open its first grocery store to the public in Seattle in the United States (US) this year. 

According to Amazon, if its proposal to open food-only outlets in India gets an approval from the government the proposed venture could help yield better returns for farmers by reducing waste and cutting legions of intermediaries generally involved in the food supply chain.

At present, Amazon operates an online e-commerce marketplace in India and competes with domestic e-commerce companies like Flipkart, Snapdeal, among others.

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