In a major shift from its present distribution strategy Indian largest listed retailer Future Group signed a deal with the World’s largest online store Amazon to sell goods online. As part of the deal Future Group would initially start selling apparels and the retail major would be selling more than 45 own labels of apparels. In the future Future Group would be selling in house brands in food, electronics and home categories through Amazon.
Amazon apart from developing new products jointly with Future Group would be handling order fulfilment and customer services for the merchandise through its portal www.amazon.in. The exclusive range of products being developed jointly by both Amazon and Future Group would be sold exclusively their online and offline stores. The deal also includes joinltly developing discounting strategy and price tags on their products. The prices and offers won’t be very different from rates at stores so as to avoid friction between the two major companies who are market leaders in their own space.
Mr. Kishore Biyani while confirming the deal was quoted as saying, We are targeting gross merchandise sales of Rs 6,000 crore in next 3 years through the alliance.” He further added that, “The deal is deeper than just transactional involvement with Amazon. We are exploring several synergies in data sharing, co-branding, crosspromotion and distribution network sharing through the partnership.”
This move by Amzon and Future Group which is perceived to very aggressive is likely to trigger a churn in the online market space presently dominated by players like Flipkart and Snapdeal. Though it is too premature to comment about how much success this tie up will reap in the future but there have been instances in the past where Amazon which had similar alliances with retailers such as Target Corp and Toys R Us in the past decade had a tough time maintaining its relationship with these companies because online seller gained scale and attracted other large brands.
With this tie up Future Group would try to gain access to 19,000 PIN codes serviced by Amazon across India and gain a share of pie of the $2.3-billion e-tailing market in India which is expected to swell to $32 billion by 2020 and account for 3% of the total Indian retail sector.
