An employee takes stock of stacked products at an Amazon warehouse in Bangalore. Photo: AFP

US e-commerce giant Amazon has entered into an agreement with India’s second-largest retail chain Future Group, aimed at building on each other’s strengths in the online and offline retail space.

The two companies on Monday announced long-term agreements to expand the reach of Future Retail stores and consumer brands through the Amazon India marketplace.

The announcement comes months after Amazon bought stakes in Future Retail’s Future Coupons – that effectively gave it a 3.58% stake in the retail chain group’s India business.

Amazon India will become the authorized online sales channel for Future Retail stores and the latter will ensure the participation of relevant stores on the Amazon India marketplace, and its programs, the companies said in a statement. The agreements focus on key categories like groceries, general merchandise, fashion and footwear.

Future Retail now attracts an annual footfall of 350 million across its retail networks like Big Bazaar and Foodhall. It has a presence in more than 400 cities with over 1,500 stores that cover more than 16 million square feet of retail space.

The Indian retail chain will also list on the Amazon Prime Now program, allowing customers to get food, groceries and general merchandise deliveries within two hours in Delhi, Mumbai, Bangalore and Hyderabad.

The company will soon list stores such as Big Bazaar and Foodhall in more cities on the Amazon India marketplace.

“Amazon and Future Retail share common values of serving customers everywhere in the best possible manner,” said Kishore Biyani, Chairman and Managing Director, Future Retail Limited. “This arrangement will allow us to build upon each other’s strengths in the physical and digital space so that customers benefit from the best services, products, assortment and price,” he added.

The two companies have also signed a long-term agreement for the distribution of Future Consumer’s portfolio of brands online. Future Consumer has brands and products in multiple categories in food, home care and personal care and beauty space.

The brands are also available at more than 1,700 stores across Future Group’s retail chains including Big Bazaar, EasyDay, Heritage Fresh, Nilgiris, WH Smith and others.

Reliance factor

The announcement comes nearly a week after Reliance Industries, owned by India’s richest man Mukesh Ambani, carried out a soft launch of its online retail venture called JioMart.

It will deliver groceries and other household essentials and is operating in Mumbai and the suburbs. JioMart will list more than 50,000 products and will offer an easy return policy. For customers, it will provide savings of up to 3,000 rupees to those who pre-register for JioMart before the platform goes live.

Reliance Retail’s entry into the online retail sector is the biggest challenge for Amazon and Walmart-Flipkart as the Mukesh Ambani-led behemoth is well positioned to create massive disruption in the market.

Reliance Retail operates 10,415 stores in more than 6,600 cities and towns, with 500 million annual customers. Industry watchers feel this provides the company with enough muscle to swiftly launch India-based operations.

According to research firm Technopak Advisors, retail in India is estimated to be a US$188 billion business in the next three years, up from about $79 billion in 2018. Online sales still account for less than 5% of overall retail.

However, affordable smartphones, growing internet usage and low data tariffs are fueling the rapid growth of e-commerce. It is no longer confined to metro cities but has penetrated to smaller towns and villages.

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