Neighborhood stores dot tens of thousands of cities, towns and villages in India. They have survived — and thrived, despite — retail giants’ billions of investment in the country. So now, Amazon is beginning to embrace them.
Amazon said on Saturday it has partnered with thousands of neighborhood stores — locally known as kirana stores — across India to use them as delivery points for goods.
The company said it’s a win-win scenario for all stakeholders. “It’s good for customers, and it helps the shop owners earn additional income,” tweeted Amazon founder and chief executive Jeff Bezos .
Bezos’ announcement today, as he concludes his fourth India trip, underscores just how vital neighborhood stores remain for shoppers in the country despite the world’s largest e-commerce giant’s major push into the country and an emergence of heavily backed ecosystem of shopping startups.
These mom-and-pop stores offer all kinds of items, pay low wages and little to no rent. Since they are ubiquitous (there are more than 10 million neighborhood stores in India, according to industry estimates), no retail giant can offer a faster delivery. And on top of that, their economics is often better than most. E-commerce is still at an early stage in India, accounting for just 3% of total retail sales, according to industry estimates.
Walmart -owned Flipkart has also arrived at the same conclusion. Last month, it invested $30 million in four-year-old Bangalore-based startup ShadowFax, which works with neighborhood stores in 300 cities to use their real estate to store inventory, and utilize their large network of freelancers for the delivery.
Any alliance with neighborhood stores would come in handy to Amazon India and Flipkart as a new contender readies its e-commerce play. India’s richest man Mukesh Ambani late last month started signing up customers for a soft launch of JioMart in suburban Mumbai.
JioMart is a joint venture between Ambani’s Reliance Jio, which reshaped the country’s telecom market with ultra-cheap mobile data, and his Reliance Retail, the nation’s largest retail chain with over 10,000 outlets in 6,500 Indian cities and towns.
The new venture is courting shopkeepers in many parts of India to use a handheld Jio terminal to help them better manage their inventory and order new stock from Reliance’s network of wholesalers. (Amazon, on its part, is slowly deepening its partnership with Future Retail, the second largest retailer in India.)
“Jio and Reliance Retail will launch a unique new commerce platform to empower and enrich our 12 lakh (1.2 million) small retailers and shopkeepers in Gujarat,” Ambani said last year.
Today’s announcement marks what could easily be one of the most remarkable weeks for Amazon in India, a market it entered six and a half years ago. Earlier this week, India’s anti-trust watchdog announced a probe into alleged predatory practices by Amazon India and Flipkart.
It was followed by Bezos’ arrival in India. At an event in New Delhi, he announced the company was investing a fresh $1 billion to its India operations and said it would work to help millions of small merchants come online for the first time. (This is on top of $5.5 billion the company has previously committed to its India business.)
Not far from the event venue, dozens of merchants assembled to protest the alleged anticompetitive practices of Amazon and Flipkart. On top of that, India’s trade minister Piyush Goyal chimed in on Amazon’s new investment to India, and said the investment was not a big favor to the nation. A day later, he backtracked on his comment.
On Friday, Amazon said it would create a million jobs in India by 2025, and ran a letter signed by Bezos on Amazon India website and app. Bezos had also sought to meet with Indian Prime Minister Narendra Modi — a request that was not met.
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