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

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 Srikanth Ram, director, of 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, and the Tata group for a share of 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 percent of orders and 85 percent 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 the 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 in October, 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. Even as Amazon finds profitability elusive in India despite pumping in about Rs 50,000 crore, the going will get even tougher than it will have to compete with to capture the next phase of growth. Amazon India will have to compete with the ‘new’ commerce players with a drastic shift from slow e-commerce to quick/instant delivery, and high margin businesses such fashion, beauty, and personal care, where it has struggled so far, brokerage firm Bernstein said in a recent research note. With India’s e-commerce spending expected to double by 2025, growth is expected to be led by new online shoppers – primarily from tier-II and III cities and there will be continued online migration of key categories including fashion and grocery. Within grocery, we are already seeing a shift from slow e-commerce to quick/ delivery. In fashion social commerce and D2C brands are gaining share, the Bernstein note said