Retail giant Amazon’s Indian arm, has acquired a share of India fashion retailer Shoppers Stop. The deal is reported to net Amazon 5% of the Indian store for a $28 million investment, a fraction of $13 billion purchase of US grocer, Whole Foods.
Shoppers Stop currently has 80 stores across India and the Amazon deal is said to give the firm scope to open 20 new stores. Shoppers Stop will also gain the ability to sell its goods, which range from clothing, to cosmetics to some home appliances, on Amazon.com.
For Amazon, however, the deal is yet another step on its journey to be part of more physical stores around the world. The deal will see Amazon set up more Amazon experience centers and reach the populations of smaller Indian towns, to boot.
Amazon experience centers allow potential online Amazon customers test out its newest offerings.
The online retailer is working hard to acquire the right stores in the right regions that will support future growth. Amazon has struggled to gain a real foothold in the bricks and mortar market in China, mainly due to Alibaba’s stranglehold there.
However, the strategic purchase of a stake in Shoppers Stop could net the online behemoth an excellent rate of return comparative to its investment. It could also give it some useful insight as to the profile and habits of an emerging market of shoppers.
Shoppers Stop currently has stores in a number of towns and cities, including:
- New Delhi.
That Shoppers Stop has 80 stores is significant to the deal. Just as Amazon.com is an online retailer, Shoppers Stop is a mainly shop-based one. That means both businesses can gain exposure in a market they’re not currently as succesful as they'd like to be.
While the Amazon, Shoppers Stop deal could be good business for both, some analysts suspect Amazon could make a takeover bid for the Indian retailer. Should profits improve for both firms, it’s a distinct possibility.