Amazon sees 'huge opportunity' for India grocery service: Executive

Grocery business will spread 'deep into Bharat', says e-commerce firm as it shuts down some other smaller units

Amazon sees a "huge opportunity" for its grocery service in India though it is shutting down its distribution platform, food delivery and education technology unit in the country.

“We plan to continue expanding grocery (service) in India,” said Srikant Sree Ram, director, Amazon Fresh, in an interview. “It continues to be a key priority for us.”

The grocery service is upbeat despite Amazon implementing an annual review process that will include off employee layoffs amid global macroeconomic uncertainty.

Amazon competes with Walmart-owned Flipkart, Reliance’s JioMart and the Tata group for a share in India’s grocery and food market, which analysts expected to be worth $790 billion by 2024 from $603 billion in 2019. “The opportunity is huge,” said Ram.

Demand is growing as e-grocery finds acceptance in India’s smaller cities and towns. Almost 65 per cent of orders and 85 per cent of new customers for Amazon India come from small towns and cities. More than half of Amazon’s 1.1 million seller partners are based in such places 

“This is not just a metro (business) for us. Here, we are excited about wider India or Bharat,” said Ram. “In 2022 itself, we've gone to more than 30 Tier-2 and Tier-3 cities.”

Orders placed on Amazon Fresh, which is available in 40 cities, are delivered the next day or same day, subject to the availability of a delivery slot. Depending on the postal code, customers are eligible for a 2-hour delivery window for products. During Amazon’s month-long sale 'Great Indian Festival (AGIF) in October, the grocery was one of the most shopped categories. 

“Our priority remains to deliver high-quality groceries, which is a big decision point for consumers,” said Ram. “We would continue to invest in this vertical.”

Amazon didn’t reveal the total number of people it plans to hire for the grocery business. “We want to penetrate deep into Bharat and continue to offer a full basket selection to consumers,” said Ram.

Amazon said it has formed partnerships with farmers to provide fruits and vegetables to customers, aiming to source products locally. 

Amazon has invested in technology and temperature-controlled supply chain infrastructure to provide high-quality fresh fruits and vegetables. “Technology is playing a critical role in serving consumers with grocery services,” said Ram.