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Why Amazon Is Buying into Indian Retailers

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Access to smaller cities and physical stores

Amazon (AMZN) has bought stakes in several Indian retailers in recent years, according to Bloomberg. Last year, it purchased a minority stake in Shoppers Stop for a reported 1.8 billion Indian rupees. In September, it bought a stake in Indian supermarket operator More.

At the moment, Amazon is reportedly in talks to pick up a minority stake in Indian retailer Future Retail. The Nikkei Asian Review reported earlier this month that Amazon was close to finalizing a deal for a 9.5% stake in Future Retail.

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The businesses that Amazon has bought into, or is in talks purchase stakes in, all operate physical store chains. Citing analysts, Bloomberg has reported that building a relationship with these retailers could help Amazon expand quickly in smaller cities in India and reach offline shoppers. Amazon has also been benefiting from access to tons of data on shopping trends.

The race for India’s retail revenue

Alibaba (BABA), Walmart (WMT), eBay (EBAY), and Berkshire Hathaway (BRK) are other international companies with huge interests in India’s retail industry. Alibaba backs several e-commerce and mobile payment startups in India, including Paytm. Berkshire recently made an investment of more than $350 million for a small stake in Paytm, Reuters reported.

On its part, earlier this year, Walmart closed a transaction that saw it acquire a majority stake of 77% in Flipkart, Amazon’s fiercest Indian online retail competitor. The Walmart deal allowed eBay to sell its holdings in Flipkart and prepare to relaunch in India with operations focused on cross-border trade.

A $72 billion industry

According to data from eMarketer, India’s e-commerce industry will be worth $71.9 billion by 2022, up from an estimated $32.7 billion in 2018.

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