MUMBAI  - Amazon is throwing darts on the Indian high street, with investments in local bricks-and-mortar stores. Turning offline in India - as the $900 billion e-commerce giant has done at home with the acquisition of Whole Foods supermarkets - underscores boss Jeff Bezos’ ambition in the country. It also protects against further incursions from its largest U.S. rival.

The Seattle-based giant has already committed $5 billion to conquer Indian online shopping. It now has 50 fulfilment centres, as well as customers in every serviceable pin code from the Southern backwaters to remote villages in the Himalayan foothills. It is fighting tooth and nail against homegrown Flipkart, valued at $21 billion following its purchase by Walmart.

The offline opportunity is far bigger, however. Internet shopping amounts to only 3 percent of a retail market worth more than $800 billion excluding travel and tourism, according to Praxis Global Alliance. The vast majority is made up of small mom-and-pop stores. Food and grocery, where customers make coveted repeat purchases, still accounts for about half of the total spend.

It’s unclear how the virtual and traditional channels might work together in India as the largely unorganised market evolves, but Flipkart already has a bridge, thanks to Walmart’s 22 cash-and-carry outlets. These sell goods wholesale to neighbourhood shops, but could easily cater to families too, if current restrictions on foreigners selling multiple brands to consumers are lifted.

Bezos appears keen to forge a similar connection. In September, Amazon backed the purchase of More, a grocery chain, for just under $600 million. Now, CNBC-TV 18 says the U.S. giant is in talks to pay around $340 million for an up to 8 percent stake in Future Retail, which describes itself as India's biggest retailer and is also the owner of Big Bazaar supermarkets.

India has marked a rare push into physical retail for Amazon outside its home market, where Bezos is also experimenting with pop-up stores. Americans have been reluctant to buy groceries through the internet. If the same trend were to play out in the South Asian nation, and the government ultimately allows foreigners a freer rein, Amazon’s early deals can help ensure it isn’t left behind.

CONTEXT NEWS

- Amazon is in talks to buy an up to 8 percent stake in India’s Future Retail, which operates the Big Bazaar brand, CNBC-TV 18 reported on Oct. 16, citing sources.

- The potential cash-and-stock deal could be worth 25 billion rupees ($338 million) and is likely to be signed within two weeks, the channel said. Future Retail describes itself as India’s leading retailer.

- In September, an investment vehicle backed by Amazon and private equity firm Samara Capital bought the More food and grocery retail chain from Aditya Birla Group for an enterprise value of 42 billion rupees ($568 million). More has 523 supermarkets and 20 hypermarkets in the country, according to its website.

- Last year, Amazon picked up a 5 percent stake in Shoppers Stop, which operates large department stores and other retail outlets.

(Editing by Clara Ferreira Marques and Sharon Lam)

© Reuters News 2018