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Amazon's Future Coupons Deal to Aid Indian Retail Footprint

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In a bid to strengthen its brick and mortar presence in India, Amazon AMZN has reportedly given its consent to acquire 49% stake comprising both voting and non-voting shares in Future Coupons, a Future Group entity.

Further, Future Coupons owns 7.3% interest in Future Retail, India’s one of the largest retailers.

Therefore, this latest agreement offers the e-commerce giant a chance of getting hold of 3.58% stake in Future Retail that would cost $104 million per its market capitalization, which currently stands at $2.91 billion.

The recent strategic move bodes well for Amazon, which has been eying 10% acquisition in Future Retail for the past few months.

Notably, Future Retail operates Big Bazaar, which is one of the nine supermarket brands that it owns. Also, it runs the chain of Easyday stores. Currently, the retailer owns more than 2,000 stores across 400 Indian cities.

Growing Brick and Mortar Initiatives

Apart from the latest endeavor, Amazon has made a strong entry into India’s supermarket by purchasing 49% stake in Aditya Birla Retail owned More, a food and grocery supermarket chain. This remains a major positive for the company.

Currently, there are 580 supermarkets and 22 hypermarkets operating under the brand name More. Additionally, the company is expanding the More stores across the National Capital Region including major cities of the country.

Further, Amazon has 5% interest in Shoppers Stop, which marks its foray into the department store chain space.

Additionally, this leading e-commerce entity is in early-stage talks with Reliance to buy 26% stake in Reliance Retail for fortifying its retail footprint in India.

Further, all these strong actions are likely to aid Amazon’s rapid penetration into the booming Indian retail market, which per an India Brand Equity Foundation report, is anticipated to reach $1.2 trillion by 2021. Additionally, total consumption expenditure in the market is estimated to hit $3.6 trillion by 2020.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote

Amazon Firming Up Foothold in India

Amazon has been leaving no stone unturned to bolster its presence in India and the above mentioned endeavors testify this fact.

Apart from its brick and mortar measures, the company is firing on all cylinders in the online retail market of the country. Amazon intends to launch Amazon Fresh service in the selected areas of Bangalore, which will brace its delivery system in the country.

This, in turn, is likely to boost performance of its e-commerce business in India.

Further, the company recently opened its biggest office in Hyderabad in order to cement its presence in India. Reportedly, the new office can accommodate 15,000 employees across 9.5 acres.

Notably, Amazon has three fulfillment centers in Telangana offering more than 3.2 million cubic feet of storage space to sellers, two sorting centers with 1 lakh square feet of processing capacity and 90 delivery stations.

The company has extended its pantry service to more than 110 cities in the country and is spreading out aggressively to small towns.

Of late, Amazon’s India head Amit Agarwal announced investments worth $5 billion in the country and another $500 million in the food and retail market.
 
All these efforts by Amazon are likely to give its competitors Walmart WMT, Alibaba BABA and eBay EBAY a tough competition as these too are pulling out all the stops to grab a slice of the potential Indian retail space.

Moreover, Amazon’s aggressive retail strategies, powerful distribution channels and Prime program are its positives, which will likely continue boosting its competitive edge against its contenders.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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