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

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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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Amazon, according to reports from CNBC, has made a formal offer to buy 60% of Flipkart, its biggest ecommerce rival in India.

Amazon continuously investing in India

Amazon has been investing in India to expand its product ranges and to ship goods to shoppers faster. It also reportedly offered to buy a 51% to 55% stake in Flipkart two years ago.

A new battle with Walmart

It was reported last month that Walmart was close to buying a majority stake in Flipkart. Amazon’s offer could start a new battle between it and Walmart, which is also trying to gain a greater foothold in India.

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Amazon to more than double number of products available in Indian market.

Expansion of product range makes service more attractive

Encouraged by the initial success of the Prime program, Amazon has announced plans to offer more than 25 million products via the service, up from 11 million products previously.  The retailer will also expand its video services to include more locally produced content and introduce Amazon Prime Music.

Broad appeal of Prime service

Under Prime, Amazon offers fast delivery, additional discounts and video streaming to members. This combination of benefits is clearly appealing as the retailer has seen subscription to its membership service rise steadily, across 300 plus cities.

By expanding the Prime program, the retailer is confident this will be a key differentiator for market share versus local competitors.

Justifies price increase

In November 2017, the retailer increased the subscription price for Prime to INR 999 (US$15.70) a year from INR 499 (US$7.85). Akshay Sahi, head of Amazon Prime in India said, “With increased selection, we feel that Prime is worth that (price). The benefits we’re providing have reached a significant value and customers have had enough time to try that programme.”

Though Amazon declined to share the number of Prime subscribers, it said that about 30% of all orders on Amazon India come from Prime subscribers. Prime customers are known to spend more on Amazon than non-Prime subscribers, to buy products they weren’t buying earlier, and tend to reduce their spending on other platforms.

 

 

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After receiving government approval to invest $500 million in a wholly owned subsidiary in India, Amazon is preparing to start selling locally made food from March.

Selling local food only 

Amazon won approval in July to invest US$500m in India over the next five years to sell third-party and its own private-label food products, sourced and packaged locally, both online and through bricks and mortar stores. Food is the only segment where it's allowed to sell directly to consumers. And it can sell only locally produced and packaged food products.

The government has asked Amazon to keep its food-only retailing venture at arm's length from its flagship marketplace business by maintaining separate boards, staff, bank accounts and inventories. The online food retail venture was initially expected to start during Diwali and was delayed because the company needed to separate the unit from its marketplace business.

The first sizable investment in the sector

The Indian government sidestepped the intense opposition to foreign investment in multiband retail in 2016 to create a food retailing segment that it said was aimed at creating jobs and helping farmers. Amazon is the first major foreign company to make a sizable investment in the food-only retail sector.

It will directly compete with Grofers and BigBasket in the online segment. Local yet foreign-funded online grocers BigBasket.com and Grofers and Supr, which delivers milk and breakfast itesm, have also received government approval to sell locally produced food products.

Other online grocery developments

Flipkart is giving online grocery selling a second try with ‘Supermart’ in Bangalore.

Big Basket and Grofers have received US$5m and US$15m funding respectively in October 2017.

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