US e-commerce giant Amazon took everyone by surprise when it recently announced its decision to buy Whole Foods Market Inc., a 465-store chain selling natural and organic groceries, for a jaw-dropping $13.7 billion, including net debt. While the US food industry is still reeling with shock, we at IndianWeb2 decided to gauge about the consequences the deal holds for Amazon’s biggest competitor in India, Flipkart.
Amazon’s recent purchase of Whole Foods rings a warning bell for Flipkart as it signifies the US-based e-commerce giant’s interest in offline food and supplies market. The deal gives us a preview of what Amazon is capable of doing if a similar opportunity presents itself in India, a market where it has already established its e-commerce presence and has even entered the groceries business much ahead of its Indian e-commerce leader Flipkart, although currently only as a delivery service, because of the Indian government’s strict rules on retail.
These rules, however, could change as the Modi government in a bid to drive in more investment into India keeps on changing the rules. Recently, the government allowed 100 percent foreign direct investment in businesses selling locally processed food. Further, according to some news reports, Amazon has been seeking an approval to sell food and groceries directly to consumers online in India.
In addition to this, we recently reported how there have been ongoing rumours that Amazon is vying to buy Supermarket Grocery Supplies Private Limited., the company that operates India’s largest online grocer, BigBasket. Although Amazon and BigBasket have denied any such development but if the deal does go through, then it might just be one of the many arrows in Amazon’s quiver for taking over the Indian grocery industry.
Considering BigBasket is one company which has been able to solve some of the major problems of online groceries retail in the India, if Amazon is able to buy Supermarket Grocery Supplies, then it would be a major setback for Flipkart.
In the past four years that Amazon has been India, it has made it quite clear that the Indian subcontinent is its most important market outside the US. This is mainly due to the fact that it lost out on a chance to make a mark in China courtesy its homegrown e-commerce giant Alibaba driving it out of its country. This is why the online retail giant turned to Asia-Pacific’s fastest-growing e-commerce market, India.
If one would think rationally, one would observe that even though Flipkart is currently number one in Indian e-commerce market, it is Amazon which has a broader ecosystem in the country when it comes to the various ways people interact with it. For instance, Flipkart has nothing to offer to compete with Amazon’s Prime Video service. This is not to say that Flipkart has never tried. The homegrown giant did launch a music download service with its digital store Flyte a few years ago but ended up shutting it down within a year of its operations.
Amazon, which now boosts of having more sellers on its Indian e-commerce site than the country’s homegrown e-commerce giant, had recently announced that it would continue its investment streak in the Indian subcontinent in expanding infrastructure and bringing in innovative solutions to better consumer and seller experience as it aims to overthrow Indian e-commerce leader Flipkart from its throne and become the number one e-commerce website in the South Asian country (Read Here). The giant has already committed a whopping US $ 5 billion in investments in the Indian subcontinent.