Future Group has started listing nearly all its brands and products across fashion, grocery and electronics on Amazon, a move seen as a precursor to the impending stake sale deal by the Indian retailer.
Over the past month, teams from both companies have met several times to make joint business plans in terms of distribution, warehousing and creating special products for Amazon’s marketplace and its grocery format Pantry and Amazon Now where Future’s Big Bazaar will be one of the preferred sellers, said people with knowledge of the matter.
“As part of our larger distribution strategy for our products and brands, we are working with various partners including Amazon,” said Future Group promoter Kishore Biyani.
The US-based online giant was earlier in talks to acquire a stake in Future Retail, which runs more than 1,600 stores across food, grocery and general merchandise.
After the amended foreign ownership rules that bar ecommerce companies from holding shares in entities selling on their platforms, Amazon is now in talks to buy a stake in Future Coupons, a firm owned by Future Group promoter Kishore Biyani, to ensure that the US retailer is in compliance with the new norms. Biyani declined to comment on the deal.
Amazon didn’t respond to an email query. Until now, Future Group sold a few products on Amazon but it was mostly through specific stores or at the brand level without infrastructure or back-end integration from the group company. Both companies will now work closely in terms of warehouses, inventory management and could even share back-end logistics, said the people cited above. To begin with, Future Group’s own brands across segments — from Koryo in electronics to Lee Cooper, Converse and FBB brands in apparel — are being launched on Amazon.in.
Also both Future Consumer brands and retail format Big Bazaar are being aligned with Amazon Now, with delivery within two hours.
The hybrid retail model, which combines the reach of e-commerce with brick and mortar’s infrastructure and service capabilities, may work best in India, according to a Morgan Stanley report.
“Grocery margins and consumer shopping basket size are relatively low in India. Against this, the only way to sustain viability would be with a hybrid retail model – customer orders generated online and fulfilled from nearby stores would be a win-win arrangement,” according to Morgan Stanley. “We believe that Future Retail with its strong store distribution spanning 138 cities across India is well placed to capitalise on this opportunity in grocery retail.”
In the listed space, Future Lifestyle is the largest department chain in the country with brands such as Central and brand Factory while Future Retail controls about a third of the country’s organised food and grocery market through the Big Bazaar and Nilgiris supermarket chains. Physical stores account for more than 95% of all retail sales in India despite most companies trying to build a multi-channel presence.
For instance, Reliance Retail has partnered about 800 small shopkeepers to sell mobile phones through the Flipkart app.