Chennai: Amazon has resumed talks with Future Group to acquire 10 per cent stake in the latter’s retail entity. This will give the e-commerce player a foothold in the online grocery business and improve the prospects in online apparel retail.
Amazon had been in talks with Future Retail for stake purchase a few months back. However, in between the talks were suspended when the FDI rules were tightened for the e-commerce sector.
The e-commerce biggies were worried about some of the clauses in the FDI rules that barred online marketplaces with foreign investments from selling products of the companies in which they hold stakes. There were also restrictions with regard to vendor purchases.
However, talks seem to have resumed and may not take much longer to get into the final stage, according to sources. Amazon spokesperson declined to comment on the development. When asked about it, Rakesh Biyani, Joint Managing Director of Future Group, too, declined to comment on ‘market specualtations”.
As per reports, Future is seeking a valuation of $20 billion for the stake sale. Amazon will also have the option to increase its stake later.
After Walmart bought Flipkart and started exploring the big opportunity in online grocery, Amazon too has been trying to make a foothold in the space. The e-commerce player operates Amazon Now, Amazon Pantry and Subscribe and Save to specifically cater to grocery. A stake in Future Retail, which operates hypermarket Big Bazaar and neighbourhood supermarket chains, Nilgiris, Easy Day and Heritage, will be a major boost for Amazon’s grocery plans.
Moreover, Future Retail too has started trials for its omni-channel model through its neighbourhood stores in the NCR. It plans to roll out the model after perfecting it with the trial. A collaboration with Amazon will help Future Retail’s omni-channel plans as well. Future Retail operates over 2,000 stores across 400 Indian cities.
Further, apparel is a strong segment for Future Retail. In online apparel retail, Flipkart with its brands Myntra and Jabong, have a stronger presence. A tie-up with Future will give Amazon a bigger role in the high-margin apparel e-tail.
