Amazon.com Inc. (AMZN – Free Report) is gearing up to be a major retailer in the rapidly growing Indian grocery market. Apart from being a prominent e-commerce platform provider, the company is planning to open brick-and-mortar stores in the country.
Reportedly, the company is seeking license under a June legislation that now allows 100% foreign direct investment (FDI) for companies that sell locally produced or sourced food items.
If Amazon eventually gets the government’s nod, India would be the second country after the U.S. where Amazon is going the brick-and-mortar way.
Notably, the company’s first brick-and-mortar store branded “Amazon Go” is expected to open in Seattle this year and will offer a “check-out free” experience to customers. The company is also planning to open its 10th brick-and-mortar bookstore in Bellevue, WA.
We note that Amazon’s shares appreciated 49.8% in the last one year compared with the Zacks Internet Commerce industry’s gain of 38.5%. International expansion is expected to back the momentum going ahead.
The First Mover Advantage
Amazon is the first global player to seek advantage from the Indian government’s push to channelize FDI toward improving the nation’s food supply chain. The e-commerce giant has sought government’s permission to open food-only outlets integrated with an online platform to sell locally produced food items.
The company plans to open a wholly-owned subsidiary to conduct this business. It is planning an investment of around $522 million in this endeavor over a period of five years.
Last year, Amazon announced that it will invest $3 billion in its India operations in addition to the $2 billion announced in 2014. The company has already invested more than $1 billion in India. Currently 20 fulfillment centers are operational across 10 Indian states. Recently, the company launched its popular Amazon Prime video.
