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Vietnamese merchants to get on board Amazon’s Global Selling network.

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Competition Commission approves sale of Aditya Birla’s More supermarket chain to Amazon.

Sale valued at INR42bn (US$588.2m)

The Competition Commission of India has recently allowed the sale of More supermarket chain to proceed. The chain will be sold to Witzig Advisory Services, a joint partnership between Amazon and Samara Capital, for more than INR42bn. Samara Capital, an Indian investment fund, will own 51% of the chain, while Amazon will have a 49% stake of the business.

Although the CCI has approved the deal, Witzig must still ensure that it is compliant to the new Foreign Domestic Investment rules that were announced last month. It remains unclear how Amazon plans to integrate More’s operations into the Amazon India platform.

A possibility is for Amazon to treat the acquisition purely as an investment and to maintain separate operations. If this is chosen, the integration with More supermarket can take place if there are future policy revisions.

The retailer currently has more than 530 supermarkets and 20 hypermarkets spread across India.

Find out more information about More supermarkets here.

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Regulatory guidelines may have significant impact for ecommerce.

Takes effect on 1 February

In a move aimed at promoting fair trade in India, the government has announced a series of regulations for the ecommerce industry. From 1 February 2019, online marketplaces will not be allowed to list exclusive products on its platform. Previously, manufacturers and suppliers would work with Amazon or Flipkart exclusively to launch new products or promotions. This was especially common for smartphones and other consumer electronic items.

The new ruling states that online retailers must provide equal trading terms for all of its vendors and suppliers. Manufacturers and suppliers are now allowed to have a maximum of 25% of total online sales revenue from a single marketplace.

Aimed at helping smaller retailers compete against Flipkart and Amazon

Another new regulation that will be introduced prevents foreign companies from selling its own products directly to shoppers. An example of a product to be impacted by this regulation would be Amazon’s Echo speaker. Under the new rules, this product will not be allowed for sale in the Amazon India site

Deep discounts offered by online retailers have badly affected many smaller businesses, making it difficult for them to compete effectively. By removing these entry barriers, the government hopes to encourage the growth of local mid and small enterprises.

Find out more information about the Indian market here.

 

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Amazon is the first to offer its service in Hindi, the most widely spoken language in India.

Leading the way

Shoppers are now able to choose the Hindi language on Amazon's mobile site or android app. This will soon be extended to its desktop and Apple mobile app. The retailer will be able to reach non-English speakers ahead of its key competitors. Flipkart, Paytm Mall and Snapdeal do not have any local language services yet. Manish Tiwary, VP of category management at Amazon India, said, "what we believe is, Amazon in Hindi is a critical step to actually address the next 100 million customers."

Broadening its reach

While English is widely used in the media, higher education and government, less than 10% of the Indian population speak the language. There are 22 regional languages and 1,000 dialects in India. The availability of Hindi on the website will help the retailer reach about 40% of the population, which implies a significant advantage over its competitors. Once its Hindi language service is established, it has plans to expand to more languages. With its recent announcement to acquire more physical stores, Amazon is building up its infrastructure for expansion into more areas.

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Amazon India partners with private equity firm to buy India’s fourth largest grocery chain.

Amazon India boosts its omnichannel strategy

In July, we reported that private equity firm, Samara Capital, was in talks to buy Aditya Birla’s grocery retail chain More. It has now emerged that the bid is actually a partnership between Samara Capital and Amazon India. Expected to be completed within the next few weeks, the deal sees Samara Capital holding 51% and Amazon India owning the remaining 49%. Valued at approximately US$600m, this deal gives Amazon access to the More network of 575 stores.

Physical stores deepen Amazon's footprint in grocery 

Amazon operates a marketplace model for its online grocery retail in India. Amazon Prime Now offers shoppers delivery within two hours but is only available in the major metropolitan cities of Mumbai, Delhi and Bengaluru. With this acquistion, Amazon can utilise the ready-made infrastructure to quickly expand its platform into more Indian cities. It aims to grow the More network to 640 stores by this year. The retailer already has a 5% stake in Shopper's Stop and is in talks for further acquisitions with Future Group and Spencer's Retail. Amazon will have a stake in more than 1,700 stores in the grocery space if the deals come through, making it a significant competitor against Walmart-Flipkart and Reliance Retail.  

Details about the More banner

The banner is currently the fourth largest grocery chain in India, behind Reliance Retail, Future Group and DMart. The chain also has a loyalty program – Clubmore – with over 20m members and an ecommerce website (mymorestore.com).

 

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