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Amazon Forges New Brick-and-Mortar Partnership in India

American retailers are vying for a share of India’s massive consumer base and growing population of online shoppers.

Amazon India, the Silicon Valley giant’s arm in the Southeast Asian region, has struck a long-term deal with Future Retail Limited (FRL), one of the country’s largest retail companies.

Seeking to capitalize on the FRL store network’s massive reach—totaling 1,500 locations across 400 cities—Amazon will provide the online expertise to make FRL a true omnichannel threat. The e-tailer will become the official online sales channel for FRL products, focusing on the categories of groceries, beauty, apparel, footwear, jewelry, travel products and accessories.

FRL will also ensure the participation of its relevant stores on the Amazon India marketplace. The retailer will enlist in the Amazon Prime Now program, which provides customers in Delhi, Mumbai, Bengaluru and Hyderabad with two-hour delivery on orders of groceries and general merchandise.

Implementing the lighting fast delivery that Amazon is known for will mean augmenting FRL’s existing store infrastructure, the two companies said in a statement. Providing seamless packaging and pickup of products ordered online is imperative to impressing the convenience of the program on FRL’s loyal shoppers.

The partnership has already launched within 22 stores across India, with plans to scale quickly already underway. While the companies have not released timelines for the rollout of the program to the entire FRL store chain, those launches are slated to take place based on agreed upon timelines, the statement said.

“Amazon and Future Retail share common values of serving customers everywhere in the best possible manner,” said Kishore Biyani, FRL’s chairman and managing director. “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.”

A dedicated team has been tasked with driving the program, and will work to synergize distribution, customer acquisition and marketing initiatives. Amazon India’s consumer data will provide valuable insights for FRL’s physical stores as well as its burgeoning online presence.

Amazon India’s senior vice president and country head, Amit Agarwal, expressed excitement about the partnership’s ability to augment the reach of both companies.

“FRL’s national footprint of stores offering thousands of products across fashion, appliances, home, kitchen and grocery will now be available to millions of customers shopping on Amazon.in, in hours across 25 plus cities,” he said.

The announcement of the partnership with FRL comes just four months after a presumed breakdown in negotiations between Amazon and Reliance Retail, India’s highest-grossing network of retail stores. Unable to agree on a valuation for the deal, in which Amazon reportedly wished to purchase a minority stake in the company, talks halted in September.

In early 2019, the Indian government tightened regulations surrounding foreign direct investment in e-commerce businesses. The shift came with a ban on exclusive deals for online marketplaces, and forbid them from having a single vendor provide more than 25 percent of a site’s total inventory. These restrictive regulations likely contributed to Amazon’s cold feet in pursuing the partnership.

The global online marketplace’s big box nemesis, Walmart, is likely feeling pangs of regret as it reflects on its 2018 investment in Indian e-commerce company Flipkart.

While the $16 billion deal (in which Walmart gained a 77 percent majority stake) was inked before the government’s latest sanctions were imposed, the companies are now subject to massive restrictions on Walmart products being sold on Flipkart. The change has reportedly resulted in thousands of items being removed from the platform.

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