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Amazon India’s ‘Shubh-Aarambh’ in Online Food Retailing May Happen During Diwali

This may just trigger a price war

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Amazon India

Amazon India has its fingers in a lot of pies in the online space. Now, come Diwali, Amazon could literally be selling you pies and delivering them at your doorstep.

According to some people in the know, Amazon is getting ready to launch its Online Food Retailing Service during Diwali. It comes as a natural extension to their online grocery business which offers same day delivery.

Amazon is planning to make their initial entry in this space through their subsidiary ‘Amazon Retail India Pvt Ltd’, with future plans to start their private grocery label, just as they have done in the US.

Having already secured the Government’s permission to stock and sell food as well as groceries in India; online and through brick and mortar stores, Amazon has plans to invest $500 million in this segment over the next five years.

How Is It Going To Work?

In some cities, Amazon currently has a tie-up with Big Bazar and Hypercity so that they are able to offer one-day delivery on groceries. The Packaged Food Retailing is going to work on the same model.

It will sell locally made and packaged food products, procured from third parties, under its own label. This will solve the big issue of logistics. Amazon is already offering some food products through Amazon Pantry, in select cities. It is just a matter of scaling up the operations.

The Future of Packaged Food Online

The Government wants Amazon to open offline stores as that could result in generating more employment and satisfy the Indian consumer’s psyche as well.

Where Indian consumers are used to look, feel and sometimes even taste food items before buying, it might take time for an online packaged food system to catch on.

Though Amazon has revealed that it has no immediate plans for such brick and mortar stores, experts feel that such a move is only a matter of time.

Devangshu Datta, Chief Executive of the retail consultancy firm Third Eyesight says, “Companies have to think of retail as an integrated activity. Customers are going everywhere. If you are a multi-product, multi-brand company you have to be in present in multi-format. It is just a question of time that Amazon sets up a physical store.”

Will It Work for Consumers and Amazon?

That’s the million-dollar question. With Indian consumers relying on the tried and tasted local stores for their daily fix of packaged food, it is going to be really hard to switch to something which they cannot feel, smell or taste beforehand.

For now, we can see one scenario where it will work quite well. Whenever somebody has to gift or send food to near and dear ones based in other cities, such a service will be a god-send.

Since Amazon is a multinational, it is being speculated that it will find it difficult to make money in this segment, as their high compliance standards will add tremendously to the cost.

Whatever the outcome may be, it is always good to see Indian consumers getting options. If marketed properly and priced right, this service from Amazon has the potential to change the packaged food landscape for good.

Would you buy your packaged food online? Or would you stick with your local shop? Let us know. Share your opinions in comments below.

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