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Amazon is in the early stages of potentially acquiring a 9.9% stake in Reliance Retail, which operates over 10,000 stores, TechCrunch reports.
Amazon may be looking to strengthen its e-commerce operations in India by partnering with Reliance Retail and using its stores to bolster its product selection and enhance its omnichannel capabilities. This could build on Amazon's previous investment in Future Retail, which operates more than 1,500 stores in India and has enabled consumers to order products from some of those locations via Amazon.
Reliance Retail is also tied to e-commerce upstart JioMart, which is increasingly becoming a threat to Amazon and other Indian e-commerce players. JioMart is an e-commerce platform operated by major Indian conglomerate Reliance Industries and two of its subsidiaries, Reliance Retail and Reliance Jio, the latter of which is a leading telecom player.
The platform offers online grocery products and just expanded from a pilot in three markets to over 200 towns in May, but it already claims to be bringing in 250,000 orders per day. JioMart's quick growth, significant backing, and plans to expand to more markets and offer more product categories should raise concerns from e-tailers in the country, and Amazon appears to be taking notice.
If Amazon invests in Reliance Retail, it may lead to a collaboration with JioMart that could help both firms capture sales in India's increasingly valuable e-commerce market.
- Working with JioMart would enable Amazon to avoid going head-to-head with a new powerful competitor, and could help it navigate regulations on foreign e-commerce firms. As JioMart expands to new product categories and markets, it'll have the chance to leverage resources from Reliance Industries and its subsidiaries, posing a serious threat to Amazon. Investing in Reliance Retail could see Amazon work alongside JioMart, possibly by featuring JioMart on its platform, so that it can benefit from the upstart's advantages instead. Additionally, India's government has restricted the operations of foreign-owned e-commerce companies like Amazon, so working with JioMart and India-based Reliance Industries through an investment could give it an avenue to avoid these restrictions and bolster its business in the process.
- For JioMart, collaborating with Amazon would give it another powerful backer it can rely on to quickly become a formidable e-commerce player. JioMart can already count on support from Reliance Industries and Facebook, which invested in Reliance Jio and is working with JioMart, but Amazon's established e-commerce business could be particularly valuable since JioMart is also operating in the space. Amazon could help JioMart rapidly gain customers by exposing it to its own customers who are already interested in e-commerce, or aid JioMart in building out its fulfillment capabilities with Amazon's own infrastructure.
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