India/US: Amazon considers aligning with India’s biggest retailer

Amazon is exploring the purchase of a 26% stake in Reliance Retail, India’s biggest brick-and-mortar retailer.

Owned by Reliance Industries, Reliance Retail had an unsuccessful meeting with China’s Alibaba Group, which then sparked talks with Amazon, two senior industry executives told The Economic Times on Thursday, August 1. Talks with Alibaba tanked due to valuation disagreements.

“Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India Regulations 2015 and our agreements with the stock exchanges,” a Reliance spokesperson told the ET. Amazon declined to comment.

Walmart’s Flipkart prompted Amazon to engage with Reliance as the crusade for Indian market share continues. Seen as a powerful growth market, both companies are eager to expand their presence in India.

The Seattle-based eCommerce giant is looking for a stake below 26% so Reliance can sell on its Indian marketplace. Regulations in India bar sellers that are more than 26% owned by the platform, one of the executives told ET.

Having a piece in Reliance will give Amazon access to the Jio telecoms platform and its 10,600-plus stores across India.

While eCommerce accounts for just 3% of India’s total retail market, it’s expected to quickly grow due to inexpensive broadband and an uptick in smartphone use.

“If the deal goes through, Reliance Retail will become a seller on Amazon India’s hyperlocal food and grocery platform, Prime Now, just like other retailers and also a seller of electronics and fashion in the Amazon marketplace,” the source told ET.

Amazon is reportedly planning to roll out a food delivery service in India and is said to be working with Catamaran and has started hiring workers for the operation. The company rolled out Prime services in the country in 2016. It already has music as well as video streaming, in addition to grocery delivery, in many of the country’s cities.

The company is also said to be planning kiosks in India that will enable consumers to purchase its hardware, including its Echo, Kindle eBook reader and the Fire TV stick. Amazon would install 100 kiosks in malls across India by the end of 2019.