Amazon is enlisting one of India’s biggest retailers to bulk up its offline business and fend off a challenge from the country’s richest man in the online space.
The US e-commerce giant is partnering with Future Retail, which has more than 1,500 stores across 400 Indian cities, the companies announced Monday. The deal will make Amazon the official online channel for Future Retail’s hundreds of stores, and Amazon will add Future Retail’s grocery products to its two-hour Prime Now delivery program in India.
Future Retail will also allow customers to pick up products they order on Amazon from its stores.
“This arrangement will allow us to build upon each other’s strengths in the physical and digital space,” Future Retail chairman Kishore Biyani said in a statement.
Amazon (AMZN), which accounts for over 30% of India’s online retail market and is locked in a battle with Walmart-owned Flipkart, has been trying to grow its physical presence in India. The Seattle-based company already has a minority stake in Future Retail, along with a small stake in Indian department store chain Shoppers Stop and grocery chain More.
The latest deal with Future Retail, which has a market value of over $2 billion, will also boost Amazon’s ammunition against a new e-commerce push by Mukesh Ambani.
Reliance, the company owned by the billionaire, recently launched an online retailer called Jio Mart offering free home delivery for thousands of grocery products. Ambani already owns India’s biggest retail chain, Reliance Retail, and has made no secret of his goal of building an e-commerce platform to rival Amazon and Walmart (WMT).
India’s retail market will be worth $1.4 trillion by 2021, according to the 2019 Global Retail Development Index by consulting firm AT Kearney. But e-commerce accounts for less than 5% of total retail, with online grocery poised to be the “next growth wave,” the report said.
Amazon appears to be digging in its heels for the fight, with an eye on India’s nearly 700 million internet users and an online retail market that Morgan Stanley estimates will be worth $200 billion by 2027. The tech giant last year opened a new 1.8 million-square-foot campus in the Indian city of Hyderabad, its biggest office building in the world.