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Amazon now enters the Indian food and grocery delivery business

Amazon's delivery box

Food is one of the three basic necessities of life. Having a sense of food security is of utmost importance for humans. The food sector has a less or no chance of having a bad time. Businesses in the food sector are mostly profitable because unlike everything else, people will not stop eating.

India has over a billion mouths to feed and this means that food businesses will have a gala time in the country. Since the advent of internet-based grocery and packaged food ordering, a completely new retail sector has emerged referred to as the food-only retail.

Amazon is one of the largest e-commerce players in the world and is the second largest player in India after Flipkart. The company has its own food sector in its platform that includes groceries as well. However, the Indian government launched new FDI rules in early 2019 and that has a huge impact on the e-commerce sector.

Forrester is one of the highly reputed market research companies in the world. According to one of their research reports, the Indian retail market is a whopping $880 billion. However, the food and grocery business out of the retail market is a massive $540 billion dollar, way more than any other in the sector. This sheds light on the fact that the food and grocery retail business is so huge in India and it has the potential to accommodate newer players if they can fulfil the needs of the ever-growing Indian consumer base.

Luckily, for Amazon, the least affected sector by the new FDI policy was the food business. The company was already performing well in the grocery delivery sector. Now it wants to taste success in the food delivery business as a whole. The parent company of Amazon India and a few of its original investors have poured in Rupees 240 crore or $35 million in its food-only retail business.

The company’s plan to expand in the food and grocery retail business is seeing a new light as new investments have come in and that too from the parent company itself. This a clear indication that the Indian food sector will have new major players who will be giving their all out for acquiring new consumers. In the past couple of years, we have seen a plethora of companies come and go but the few that remained are having some of the best businesses in India. Non-food companies such as ride-hailing companies Uber and Ola have started their food delivery services in the country either through their own arm or by acquiring other players. Even Google has heavily invested in a company called Dunzo to get a taste of the huge Indian market.

So, this is not surprising to see the likes of Amazon dipping their feet into this sector for added benefits. It has also been witnessed that the Indian market is heavily infused with Chinese funds especially in the tech-based startups all across the country. It is very much possible to see the Chinese giants such as Alibaba, Tencent and so on investing in this sector in the near future in order to rival the American presence in the country. Alibaba has been smart enough to invest in the largest startup of India, Paytm and it can do so in the food sector as well.

-Soumya De

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