Amazon received the license to sell locally made food items in India, and with that, the ecommerce giant will step into retail food selling and delivery across India, from March this year.
The government of India granted permission to Amazon with 100% FDI to sell locally made food items in the country since eight months and with an investment of $500 million, Amazon India is now gearing up to launch the new service in India from March 2018. The condition here is to sell locally produced and packaged food items on retail basis, hence giving a fierce competition to online food and grocery retailers like Grofers and Godrej Bigbasket. While Grofers sale mostly grocery items including food and vegetables, big basket mainly focuses on the food and vegetables.
The big investment plans are evidence of the fact that Amazon had faith and confidence in the Indian market – unlike Walmart who did not enter the Indian market citing that it was not viable as it wishes to sell non-food items too. But for Amazon, they already have deep pockets in India and the investment that they will make for food retail, will prove to be small for Amazon India – but enough to send right signals to the competitors in the food retailing sector that it is ready for the battle.
But it will still not be an easy road for Amazon, because currently, it runs an online marketplace – which means they cannot directly sell products; instead it is only a platform for sellers to sell their items. So that’s why they need such huge investments, but it is also said that the government is also considering to allow the food retailers to ell personal care items, limited to 25% of their total sales. Which is quite understandable too, since ecommerce websites are allowed to sell food items, why not the other way around.