E-commerce giant Amazon’s investment Kishore Biyani’s group company Future Coupons, is a win-win for both groups and is expected to increase competition in India’s retail sector, feel analysts.
On Thursday evening, Biyani’s group said that Amazon is acquiring a 49% stake in Future Coupons, which holds about 7.3% stake in Future Retail through convertible warrants, the company that holds Biyani’s BigBazaar retail chain. The transaction gives Amazon a call option to acquire all or part of the Future Retail stake that is held by Future Coupons.
This is the third investment by Amazon in an Indian brick and mortar retail business following Shoppers Stop and More.
“This is a Win-Win deal for both as Amazon and Future Group. Amazon gets access to one of India’s largest physical retailers, database while Future Retail gets access to India’s leading E-commerce player, cutting edge technology platform, analytics and one of the World’s largest company as its partner. Amazon is looking to scale up its foods and grocery business in India. This acquisition will help them achieve that,” said Abneesh Roy of Edelweiss.
Future Retail has a network of more than 1,500 stores across various formats including 293 BigBazaar stores.
The deal will add to the intensity of competition in the Indian retail sector, which now has three big groups fighting it out – Amazon and Future, Walmart-Flipkart and billionaire Mukesh Ambani’s Reliance Retail.
“It will be interesting to see how the other large Grocery retailers like Tata Group (via Trent) and Avenue Supermart (Dmart) align themselves. We do see Walmart needing to partner with a Physical Retailer as Amazon – Future and Reliance Retail already have a presence in both Offline and Online,” said Roy.
On 11 August, addressing shareholders of Reliance Industries, Ambani said that his company is aiming to revolutionize India’s retail industry by connecting as many as 30 million kirana or neighbourhood stores, through its offline-to-online initiative.
Unveiling what he termed as a $700 billion opportunity, Ambani said that the so-called ‘new commerce’ platform would connect consumers, merchants and producers across the country.
Reliance Retail crossed ₹1.3 trillion in revenue last fiscal and added two-thirds of its stores in tier-II, III and tier-IV towns.