Will Amazon’s Food Retail Foray End BigBasket’s Reign At The Top?

Seattle-based e-tailing giant Amazon.com, Inc has sought government approval to enter India’s food-retailing sector with investments totalling $515 million (Rs 3,368 crore) over the next five years. The company, which is already the number 2 player in India’s fast-growing e-commerce market, will open brick-and-mortar outlets as well, apart from an online portal.

One of the biggest advantages that Amazon has over the likes of SuperMarket Grocery Supplies Pvt. Ltd-owned BigBasket and Grofers is its huge captive user base, which it can tap seamlessly. Besides, says Sanchit Vir Gogia, Chief Analyst and CEO at Greyhound Research, Amazon’s ability to attract more suppliers through better guaranteed volumes, rates and incentives gives it a natural edge over others.

“The art of doing e-commerce does not always lies in category expertise, but in keeping costs low from a technology and customer perspective. Amazon’s ability to sell, upsell, cross-sell and offer better discounts can be traced to its low CAC,” adds Gogia.

“For Grofers to exist amid this game, it will have to significantly change their internal processes, designs and expertise. While they might be pivoting, one must remember that the business was designed to handle hyperlocal delivery and not inventory” said Gogia.

[VC Circle]

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