An online retailer, Amazon was in a battle for the government’s approval to start the online sale of food and grocery items in India.
The Indian government has approved Amazon’s plans to sell food and grocery in India, Reuters reported on Tuesday. The order that would allow the company to also stock food items would pitch it directly alongside Indian online retailers, particularly Flipkart.
Apparently, the company refused to reveal more details on the order but affirmed that it has won the government’s approval to sell food products. “Yes, we have received the government approval for food retail…We are excited by the government’s continued efforts to encourage FDI (foreign direct investment) in India for a stronger food supply chain,” said the company’s India spokeswoman, Livemint reported.
A source which is in the knowledge of the matter has said that Amazon has planned to invent $500 million more in India, this is in excess to the $5 billion that the retail giant had committed to invest.
“Currently, Amazon provides a marketplace for sellers to sell their products. Once this approval comes through, it will allow Amazon to control the supply chain end-to-end and will allow Amazon to invest in every part of the supply chain,” the report added.
The new approval would put the company in a much stronger position to capture the food product market as it has bigger coffers than other online food retailers, for instance, BigBasket. “Grocery and food are both very tricky categories and hard to crack. Most large supermarket chains have struggled to build out proper supply chains and create sustainable businesses. Having said that, of all e-commerce companies, Amazon is probably the best placed to succeed in this category. They have deep pockets and they’ve already made inroads through Amazon Now and programmes such as Prime,” said Harminder Sahni, founder and managing director at Wazir Advisors, Livemint reported.
Flipkart, whose funders include Tiger Global, Tencent Holdings and Microsoft, too, plans to venture into the food arena, according to the company executives, it added.
Amazon had recently announced its plans to buy Whole Foods Market Inc. for $13.7 billion.