Amazon focuses on small cities to win grocery battle; expands service to 110 cities

E-commerce major Amazon India on Thursday said it has expanded its grocery service Pantry to 110 cities in the country as it deepens focus on the category to drive further growth in business. Amazon competes with newly minted unicorn BigBasket, Grofers, and Flipkart’s Supermart.

Amazon’s has enhanced its focus on grocery segment as “consumables is a fast-growing category for Amazon.in,” its Director Category Management Saurabh Srivastava said in a statement announcing the recent expansion.

The company has been rapidly expanding the grocery business from 30 cities around October 2017 even as the company had in March this year had increased the authorized share capital of its food retail business Amazon Retail India to Rs 355.5 crore from Rs 165.5 crore, as its regulatory filing sourced by business signals platform Paper.vc. The number of its equity share, hence, went up from 165 million to 355 million of Rs 10 each.

The company had also put Rs 10.5 crore in Amazon Retail last year and had committed up to $500 million in the food retail arm to sell local food products through the online and offline platform. Online, Amazon Retail is among the vendors on its grocery platform Amazon Pantry.

Arch-rival Flipkart had reportedly planned allocation of $264 million in Supermart in August last year. On the other hand, Grofers had raised $60 million in March this year led by SoftBank taking its total fundraising to $300 million, as per deals tracker Crunchbase.

However, the vast online grocery market is currently led by India’s first online grocery store Bigbasket, which raised $150 million from Alibaba, the UK’s CDC Group and South Korea’s Mirae Asset Global Investments in March this year at a valuation of $2.28 billion, as per Paper.vc.

From Rs 580 crore revenue in FY16, Bigbasket went up to Rs 1,605 crore in FY18 in comparison to Grofers increasing its revenue from Rs 14.3 crore in FY16 to Rs 53.5 crore in FY18, showed regulatory filings. With respect to losses, Bigbasket lost Rs 310 crore in FY18 vis-a-vis Rs 258 crore losses recorded by Grofers in the same year.

Amazon has added over 70 cities and towns in the past six-seven months including Ichalkaranji in Maharashtra, Kaithal in Haryana and Belgaum in Karnataka and provides access to around 5,000 products from more than 500 brands across various categories, said Srivastava.

Reliance, which is foraying into online retail and already has a network of more than 10,000 Reliance Retail stores, will help grow the number digitised retail stores from current 15,000 to over 5 million by 2023, PTI reported citing a study of Bank of America Merrill Lynch said. Around 90 per cent of India’s $700 billion retail market remains unorganised that mostly comprises of kirana stores.

Reliance is looking at setting up its Jio mobile point-of-sale (MPoS) devices at these kirana stores.