Amazon Enters Into E-Pharmacy And E-Grocery In India

Amazon Enters Into E-Pharmacy And E-Grocery In India

Amazon has ventured into e-pharmacy and e-grocery business in India. During lockdown, both these sectors saw a massive increase in demand of services, and therefore many Indian players like Swiggy, Zomato, Reliance, etc also forayed into it. Let’s dive deeper.

Crux of the Matter

Amazon Enters Into E-Pharma
Amazon launched its first E-pharmacy business in India in Bangalore and soon will expand to other cities. Customers would be able to order online prescription-based medication, basic health devices, and Ayurveda medication from certified sellers.

NetMeds, 1mg, PharmEasy, and Medlife are local players operating in the Indian E-pharmacy segment. All India Organisation of Chemists and Druggists (AIOCD), representing more than 850,000 pharmacy outlets opposed the E-pharmacy business and demanded its ban.

Why E-Pharma Seems Promising?
Driving factors are increase in internet penetration, increase in the number of smartphone owners, ease in ordering medications through an e-commerce platform and app, increase in chronic diseases, rising per capita income, and resultant healthcare spending. Moreover, during the pandemic e-pharmacy business saw a massive spike in demand.

Amazon Enters E-Grocery
During the lockdown, companies like Zomato, Swiggy, JioMart, etc. ventured into the E-grocery business. Amazon also launched E-grocery – Amazon Fresh – and E-Food – Amazon Food – businesses in India. Currently, Amazon India has more than 25 Amazon Fresh centres.

Curiopedia
  • PharmEasy is an online platform that provides medicines delivery & diagnostic tests to patients. It was founded by Dharmil Sheth, Dr. Dhaval Shah in 2015.
  • Bengal Chemicals & Pharmaceuticals Ltd. (BCPL) is India’s first pharmaceutical company. The management of the company was taken over by the Union government on 15 December 1977, and the company was nationalised on 15 December 1980. After 6 decades of losses, BCPL became profitable in the financial year 2016–17. It was founded by Prafulla Chandra Roy who is also known as the father of chemical science in India.
  • The domain ‘amazo.in’ has been bought by Flipkart. Thus, whenever you search ‘amazo.in’, you will be directed to Flipkart. Since relentless was one of the considered names for the company, ‘relentless.com’ is also bought by Amazon and will redirect you to Amazon.

Why Has Amazon Sent Notice To Future Group Over Reliance-Future Deal?

Why Has Amazon Sent Notice To Future Group Over Reliance-Future Deal?

In August 2020, Future Group made a deal worth ₹24,713 crores with Reliance to sell Future’s retail business. Amazon, however, recently issued a legal notice to Future Group which states that its deal with Reliance was a breach of contract. How is suddenly Amazon into the picture and what contract did it have with Kishore Biyani’s Future Group? Let’s find out.

Crux of the Matter

Legal Battle
With an outstanding debt of ~₹13,000 crores, Future Group was debt-laden and the Covid-19 crisis increased the problems for Future Group. So in August, it sold its Retail business for ₹24,713 crores to Reliance Retail.

Amazon sent a legal notice to Future Group for violating its “contractual rights” in the deal made with Reliance.

Why Is Amazon Objecting?
It all started with Amazon buying a 49% stake in Future Coupons Ltd, which contributes 7.3% stake in Future Retail Group, in 2019. This translates to Amazon holding ~5% stake in Future Retail. As a part of the deal, Amazon had the right to buy (a call option) all or part of shareholding in Future Retail after a period between 3 and 10 years of the deal.

The deal also included “a restricted list” of companies – mostly competitors with the name of Reliance explicitly mentioned – that Future was not supposed to sell the business to without making an offer to Amazon. Amazon says Future Group did not inform Amazon of the deal in progress. Amazon has taken the matter to Singapore International Arbitration Centre for resolution.

What Future Group Has To Say?
Future Group says it had reached out to Amazon while it was facing issues due to lockdown, but it kept delaying without any concrete commitments. One of Future’s close associates said Amazon was kept in the loop while the Reliance deal was in progress.

Future Group also says that it has not violated any agreement as the deal with Reliance does not involve any sale of ‘stake’ but involves only the sale of Future Group’s ‘assets’. Amazon says this deal is deliberately structured to oust Amazon.

The Reliance-Future Group deal involves combining 5 listed entities of Future Group into 1, and transferring the ‘retail assets’ to Reliance – this structure obviates the need for a stake sale.

Views Of Legal Experts
Experts also say that Amazon cannot challenge the deal as it involves only listed entities, whereas it has sent a notice to and had an agreement with Future Coupons, which is an unlisted firm.

Moreover, as per Future-Amazon agreement, Amazon’s rights to buy promoters’ stake only comes into effect after 2022. This right is also based on the condition that FDI rules regarding investment in retail firms change in India. Currently, India does not allow E-commerce companies to own stake in entities that sell on their platforms – here Future Group sells products on Amazon.

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  • Pantaloons is one of the major clothing retail outlets in India with over 350 stores in 160 cities. Pantaloons was previously controlled by the Future Group, and was taken over by Aditya Birla in 2012-13.
  • Alternative dispute resolution typically denotes a wide range of dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement with the help of a third party. Alternative dispute resolution (ADR) is generally classified into at least four types: negotiation, mediation, collaborative law, and arbitration.
  • Amazon Go is a chain of convenience stores in the United States, operated by the online retailer Amazon. The stores are partially automated, with customers able to purchase products without being checked out by a cashier or using a self-checkout station. As of 2020, there are 27 open and announced store locations.

Amazon files writ petition, seeks stay on antitrust probe

A day after E-commerce giant Amazon Inc. announced data centers in India, it filed a writ petition in the Karnataka High Court. This move was made to seek an interim stay on the Competition Commission of India’s (CCI’s) order of probing its reported business malpractices. The investigation covers both Amazon and Walmart owned rival Flipkart.

Crux of the Matter

Why Amazon Under Radar?
The Investigation by the CCI was launched last month after the Delhi Vyapar Mahasangh (DVM), a traders’ body, filed a complaint against e-commerce players who gave deep discounts and did preferred listings. The order had come a day before Amazon founder Jeff Bezos arrived in India to attend a meeting with small business owners, where he pledged to invest an additional $1 billion to get such companies online.

The Writ Petition
In its petition, the American multinational said that the CCI order was passed “without application of mind” and would cause irreparable loss to the reputation of the company if an investigation is allowed. An Amazon spokesperson declined to comment saying “the matter is sub judice”. An email seeking CCI’s response remained unanswered.

CCI’s Response
Praveen Khandelwal, secretary-general of Confederation of All India Traders, a traders’ body that has led the protests against Amazon, questioned its motive for opposing the probe. He was quoted as saying “Let the investigation be conducted by CCI, which will make their position clear. The stay application by Amazon is testimony to the fact that something is wrong with its business model.

Curiopedia

Amazon.com, Inc. is an American multinational technology company based in Seattle that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is considered one of the Big Four tech companies, along with Google, Apple, and Facebook. Amazon is known for its disruption of well-established industries through technological innovation and mass scale. It is the world’s largest online marketplace, AI assistant provider, and cloud computing platform as measured by revenue and market capitalization and is the largest Internet company by revenue in the world. It is the second largest private employer in the United States and one of the world’s most valuable companies. More Info

Amazon Puts Money Where the Mouth is

To fulfill the growing demand for cloud services in the country, Amazon Web Services has announced that it will build two data centers at an investment of about Rs 11,624 crore ($1.6 billion) in the state of Telangana. 

Crux of the Matter

The location of the first data center is proposed at Chandanvelly village in Shabad Mandal (66,003 sq.m) and the second at Meerkhanpet village in Kandukur Mandal (82,833 sq.m.).

Amazon has submitted its project report for obtaining environmental clearances for the construction of the data centers.

Nearly 90% of the investment would be directed towards the high-end computer and storage equipment which would be installed at these 2 data centers.

Apart from these two locations, the Telangana state government will also be allocating land to Amazon to develop data centers at Raviryala in Maheshwaram.

Amazon’s India VP Amit Agarwal said, “Over the last 15 years, we have invested significantly in India across 30 office spaces, the AWS APAC region in Mumbai, 50 fulfillment centers in 13 states as well as hundreds of delivery and sorting centers, creating nearly 200,000 jobs.”

Why Telangana?
Hyderabad has been regarded as India’s biggest tech hub where Amazon has been constantly investing for nearly 5 years. The state of Telangana has a dedicated policy for data centers which aims to attract operators with incentives and certain advantages.

In 2015, it had opened a large e-commercial warehouse to offer training to locals on how to use the platform. In 2019, AWS opened a 170,000 sq.m office with around 15,000 workers on a 9.5-acre plot in Hyderabad’s IT corridor of Gachibowli.

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Amazon Web Services (AWS) is a subsidiary of Amazon launched in July 2002 that provides on-demand cloud computing platforms and APIs to individuals, companies, and governments, on a metered pay-as-you-go basis. In aggregate, these cloud computing web services provide a set of primitive abstract technical infrastructure and distributed computing building blocks and tools. The AWS technology is implemented at server farms throughout the world and maintained by AWS. Fees are based on a combination of usage (known as a ‘Pay-as-you-go’ model), the hardware/OS/software/networking features chosen by the subscriber, required availability, redundancy, security, and service options. More Info

Amazon collaborates with Indian Kirana stores

bezos

With Flipkart, Myntra and Reliance already tying up with retail partners for deliveries, next in tow is Amazon. The tech giant’s CEO, Jeff Bezos ended his three-day tour to India with an announcement of partnering with Kirana stores. Thousands of such stores across the country will act as delivery points.

Crux of the Matter
  • The development comes after the minister of commerce Piyush Goyal has emphasised on propping up India’s Kirana stores through partnerships with e-commerce marketplaces and platforms, back in November 2019.
  • The department for the promotion of industry and internal trade (DPIIT) had reportedly written to e-commerce firms, seeking their suggestions on how small retailers and neighbourhood stores can be included in the sector.
  • At an event in New Delhi, Bezos announced the company was investing a fresh $1 billion to its India operations and said it would work to help millions of small merchants come online for the first time.
  • Amazon also maintains a program called Amazon Easy in India, as part of which it trains shopkeepers to guide first-time internet users shop online.
Curiopedia

Amazon.com, Inc is an American multinational technology company based in Seattle that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is considered one of the Big Four tech companies, along with Google, Apple, and Facebook. Known for its disruption of well-established industries through technological innovation and mass scale, It is the world’s largest online marketplace, AI assistant provider, and cloud computing platform, as measured by revenue and market capitalization. It is also the second-largest private employer in the United States and one of the world’s most valuable companies. More Info