Amazon talks to buy stake in India’s Reliance Retail

Amazon is eyeing up India’s largest brick-and-mortar retailer, according to The Economic Times.

Two senior executives told the Indian newspaper that Amazon is in talks to acquire a 26% stake in Reliance Retail – the retail arm of Reliance Industries, which is controlled by Mukesh Ambani, one of the richest men in India with a net worth of $47.3 billion.

Reliance, which says it serves 5 million customers a week, was previously in talks with China’s Alibaba Group but the deal fell through because of differences in valuation, the two sources said.

This deal would give Amazon access to Reliance’s vast network of stores in India, which number 10,415, and its telecoms platform, Jio, which could prove to be invaluable for its fulfillment of online grocery orders in the future.

Being connected to one of the most powerful companies and families in India could also put Amazon in a better position when it comes to lobbying against the Indian government, especially as rules around how foreign companies can operate within the country have become more stringent.

“There could be synergies which are beyond retail,” Arvind Singhal, chairman of retail consultant Technopak Advisors told Reuters. “Whenever there is any kind of policy intervention needed, to be a partner with Reliance certainly will be a big asset.”

Amazon did not immediately respond to Business Insider’s request for comment. It declined to comment when contacted by The Economic Times. “As a policy, we do not comment on media speculation and rumours,” a spokesman for Reliance said in a statement to Business Insider.

The partnership would be mutually beneficial, however. Reliance stands to benefit from having access to Amazon’s giant ecommerce platform and potentially being able to use its technology, supply chain, and logistics platform as it aims to connect its stores digitally through its telecoms network, Reuters wrote.

Analysts say that the Indian ecommerce market has enormous potential for growth. It is expected to be worth $200 billion by 2026, up from $38.5 billion in 2017, according to the India Brand Equity Foundation.

But while Amazon is the current leader in the market – racking up sales of $8.8 billion in 2018 – competition is continuing to heat up. According to recent data from Edge by Ascential, Walmart-owned Flipkart is poised to overtake Amazon for the top spot by 2023.

Source: businessinsider.com