E-commerce giant Amazon is reportedly in talks to acquire a 26 percent stake in a massive Indian retailer allowing the company to dominate a $200 billion market.
Business Insider reports that e-commerce giant Amazon is in negotiations to acquire 26 percent of India’s largest retailer which would give the company access to a vast network of physical stores, something which would be hugely beneficial to the firm for its fulfillment of online grocery orders in the country.
Two senior executives told the Indian newspaper, the Economic Times, that Amazon is looking to purchase a stake in Reliance Retail which is the retail division of Reliance Industries and is controlled by one of the richest men in India, Mukesh Ambani. Reliance serves approximately 5 million customers a week and was previously in discussion with China’s Alibaba Group to strike a partnership, a deal which fell through due to differences in valuation.
Reliance Retail has approximately 10,415 retail stores in India and runs a telecoms platform called Jio which could be extremely valuable for Amazon projects such as its online grocery fulfillment service. Being connected to Reliance Retail could also help to put Amazon in a better position when it comes to lobbying the Indian government.
Arvind Singhal, chairman of retail consultant Technopak Advisors told Reuters: “There could be synergies which are beyond retail. Whenever there is any kind of policy intervention needed, to be a partner with Reliance certainly will be a big asset.” Neither Amazon or Reliance Retail have commented on the deal, with Reliance simply telling Business Insider “As a policy, we do not comment on media speculation and rumors.”
Reliance will also benefit from having access to Amazon’s huge e-commerce platform and use of Amazon’s technology, supply chain, and logistics platform as Reliance aims to connect its stores digitally through its telecoms network. The Indian e-commerce market is expected to be worth $200 billion by 2026 up from $35.8 billion in 2017 according to the India Brand Equity Foundation.
While Amazon has been dominating e-commerce for some time with sales of $8.8 billion in 2018, competition in the sector is beginning to increase. A recent report from Edge by Ascential claims that Walmart-owned Flipkart could overtake Amazon for the position of top e-commerce retailer by 2023.