By Diwali, Amazon would be selling packaged foods and groceries online and will also tie up with third-party offline retail outlets as well.
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.
ET reports that the move is being keenly watched as it's expected to trigger a price war with organised brick and-mortar retailers such as Big Bazaar and online grocery companies, given Amazon's aggressive pricing strategy.
Almost every traditional brick-and-mortar retailer has been devastated by this pending merger due to the fear that AMZN will now be able to execute its automation and efficiency platforms within food retail, something which has always been considered very hard to do due to logistical issues with food products. At present, Amazon Pantry offers food products sourced from online vendors. 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.
Now with its FDI licence, Amazon will sell directly to consumers.
Navigating the retail landscape has become a challenge for most retailers, especially with industry leaders like Amazon helming the ship. The intention of the e-commerce giant is to create a private grocery label in India.
After Amazon forayed into grocery, past year it launched its first private grocery label in the United States which are exclusively available to Prime members.
The government is keen that Amazon open brick-and-mortar stores in India but the company is yet to decide on this, said a person aware of the development.
Analysts say that a physical store for amazon is just a matter of time.
Chief executive of a retail firm that operates in the grocery and food segment said that most multinationals will find it hard to make money in food retail because their compliance standards will add enormously to costs.