Amazon Scouting For An Off-Line Partner In India

While fears of a retail invasion by the two giants, Walmart and Amazon, continue to haunt domestic retailers in India, the probable merger of Japan’s SoftBank and China’s Alibaba, giving rise to a third player, has given a ray of hope to small retailers in the online space at least

It is undisputed that India is a growing consumer economy. To quote statistics, the organized retail penetration is still at a nascent stage at 7–8%, but it is growing at a frenetic pace of 20–25% annual CAGR (compounded annual growth rate) as per the reports of Indian Brand and Equity Foundation. The Indian retail market continues to attract foreign direct investment (FDI) at an annual growth rate of 35%.

The growth of modern trade retail stores in India has seen an uptick in the last 15 years. Simultaneously, mushrooming retailers in the e-commerce space have taken consumerism to the nook and corner of India.

Increased affordability of smartphones, change in working habits owing to a demographic transition, and faster and cheaper mobile data have resulted in deeper Internet penetration in rural, urban, as well as adjoining areas within a radius of 300 kilometers of each Tier-I, Tier-II, and Tier-III cities (rurban) of India. Internet access propelled an exponential growth in multi-brand e-commerce, making it more accessible and inclusive. In addition, the Government of India’s initiatives such as Digital India, Make in India, Start-up India, and Innovation Fund are all acting as catalysts for the growth of e-commerce in India.

In the present Union Budget, USD 1.24 billion has been allocated to the BharatNet project, which promises to take broadband services to 150,000 gram panchayats. The increased digital inclusion of rural India will certainly trigger a progressive expansion of e-tailing in India. Unprecedented investments and lateral acquisitions have introduced stiff competition in the e-commerce space, particularly in marketplace models.