Amazon’s online food retail venture may be delayed. It was anticipated to start around in Diwali. Sources said that the company requires to keep it apart from its marketplace. The company connects the marketplace sellers and buyers, but Amazon will have to create a separate platform for food ventures. Food is the only segment where the government has allowed it to sell the products directly to the customers.
American firm Amazon is the first such global company, which government has permitted selling food products directly to consumers in the country. The government of India had approved 100% FDI in the food retail sector last year to promote farming. Amazon and other international retailers are not allowed to sell non-food products directly to the consumer in the country. The Indian government has asked Amazon to take apart its stock of direct food retailing from the marketplace. The company also has separate office and accounting system for its new platform. The Amazon India spokespersons refused to say anything about this. They said, “We cannot comment anything about the sanction status of our food retail license.”
Amazon intends to invest $500 Million in India in coming five years. During this time, the company will sell private label and third party food directly to the customers. The company will be sourcing and packaging these products at the local level. According to a source, the company will also have to get approval from the Food Safety and Standards Authority of India (FSSAI).
Entry in this sector by Amazon can get price war between organized brick and mortar retailers and online grocery companies. This is owing to the aggressive strategy of the American company. Amazon is currently offering food products through third-party sellers in some cities of India. The company has tied up with Big Bazaar and HyperCity for this. Amazon launched its first private grocery label last year in the US. The company’s own private label contains products such as coffee and baby food. In the US, the company’s private label products are being sold through prime membership. The prices of these products are significantly lower than other popular brands.