Amazon-Shoppers Stop deals a win-win situation for both retailers

India Infoline News Service | Mumbai | September 27, 2017 12:22 IST

Mumbai-based Shoppers Stop Ltd has decided to sell its 5% stake to Amazon NV Holdings LLC, the investment arm of Amazon.

Mumbai-based Shoppers Stop Ltd has decided to sell its 5% stake to Amazon NV Holdings LLC, the investment arm of Amazon. This paves way for Amazon to foray into local offline retail specifically the grocery business. Shoppers Stop will raise ~Rs 180 crore out of this deal and will be able to promote its products via Amazon’s e-commerce platform. Let’s discuss them in detail.

Advantage Shoppers Stop

Firstly, this investment deal will help Shoppers Stop to cut down its debt. The amount earned from the deal might be partially utilized to pay debt as well as to fund its expansion plans.

It will help the company to promote and position its in-house brands in the market aggressively through Amazon's widely used ecommerce platform. It will help the retailer to leverage the platform and offers benefits of bargaining which will help the company to improve its financial performance.

Currently, Shoppers Stop has a strong presence in metros and other commercial cities across India. The penetration in smaller cities (tier 2 &3) is relatively less. However, this deal will give Shopper Stop to access the extensive logistic network of Amazon and serve small towns in the country. Besides, Amazon will offer special space on its webpage for Shoppers Stop’s products.

Advantage Amazon

Amazon targets to expand its grocery business in India. Shoppers Stop Hypercity brand can be a platform for Amazon to enhance its grocery segment in the offline model.

Amazon also plans to set up experience centres/brick-and-mortar outlets but setting up such store by own will incur huge capex. Therefore, this deal will help the Amazon to use Shoppers Stop stores to build such outlets in order to effectively connect with its customers.

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